: The minimum percentage of the total purchase price an investor must pay in cash. Currently, the Federal Reserve's Regulation T generally requires an initial margin of 50% .
: The minimum amount of equity an investor must maintain in their margin account after the purchase.
: A notification from a broker that the account value has fallen below the maintenance margin. Investors must then deposit more cash or sell assets to cover the shortfall.
Buying on margin is the practice of purchasing stocks by paying a small percentage of the price (a down payment) and borrowing the remaining balance from a broker. This strategy uses to increase buying power, allowing investors to control more shares than they could with cash alone. Key Concepts and Terminology
: The portion of the securities' value that the investor actually owns (Total Market Value - Loan Balance).
: The stocks purchased on margin serve as collateral for the broker's loan. Benefits and Risks What did "buying on margin" mean in the 1920s? - Quizlet