USA HISTORY

Detailed explanation-1: -Margin trading refers to borrowing money from the broker to purchase stock. The investor is allowed to buy more securities than what he can afford with the available funds at the moment.

Detailed explanation-2: -Buying on margin is borrowing money from a broker in order to purchase stock. You can think of it as a loan from your brokerage. Margin trading allows you to buy more stock than you’d be able to normally. To trade on margin, you need a margin account.

Detailed explanation-3: -As with any loan, when you buy securities on margin you have to pay back the money you borrow plus interest, which varies by brokerage firm and the amount of the loan.

Detailed explanation-4: -Buying on Margin Example Consider an investor who purchases 100 shares of Company XYZ stock at $100 per share. The investor funds half the purchase price with their own money and buys the other half on margin, bringing the initial cash outlay to $5, 000. One year later, the share price rises to $200.

Detailed explanation-5: -Buying on margin is the purchase of an asset by paying the margin and borrowing the balance from a bank or broker. more. House Call. A house call is a brokerage firm’s demand that a customer cover a shortfall in the amount deposited to cover losses in purchases made on margin. more.