Margin buying

In finance, margin buying denotes a purchase (e.g. of securities) which is financed primarily by short-term borrowing (e.g. from a broker), together with a portion of cash, known as the margin. This has the effect of magnifying any profit or loss made on this purchase. In particular, if the value of the purchase drops by an amount equal to the margin, one may face a margin call, being forced by the lender of capital to immediately liquidate in order not to default on the loan.

See also

• Derivatives
• Securities