What Is Margin? In finance, the margin is the collateral that an investor has to deposit with their broker or exchange to cover the credit risk the holder poses for the broker or the exchange. An investor can create credit risk if they borrow cash from the broker to buy financial instruments, borrow financial instruments to sell them short, or enter into a derivative contract. Buying on margin occurs
What Is Margin Debt? Margin debt is debt a brokerage customer takes on by trading on margin. When purchasing securities through a broker, investors have the option of using a cash account and covering the entire cost of the investment themselves, or using a margin account—meaning they borrow part of the initial capital from their
What is Margin Loan Availability? Margin loan availability describes the amount in a margin account that is currently available for purchasing securities on margin or the amount that is available for withdrawal. A margin account makes loans available to the customer of a brokerage firm using the customer’s securities in their account as collateral. How
What Is the Marginal Rate of Substitution (MRS)? In economics, the marginal rate of substitution (MRS) is the amount of a good that a consumer is willing to consume compared to another good, as long as the new good is equally satisfying. MRS is used in indifference theory to analyze consumer behavior. When someone is indifferent to substituting
What Is the Marginal Rate of Transformation (MRT)? The marginal rate of transformation (MRT) is the number of units or amount of a good that must be forgone to create or attain one unit of another good. It is the number of units of good Y that will be foregone to produce an extra unit
What Is Marginal Analysis? Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximize their potential profits. Marginal refers to the focus on the cost or benefit of the next unit
What Is a Magnetic Stripe Card? A magnetic stripe card is a type of pass that permits the user to complete electronic transactions or access a locked physical space. The “stripe” contains embedded information that identifies its user. Types of magnetic stripe cards currently in use include driver’s licenses, credit cards, employee ID cards, hotel
What Is a Main Home? Main home is a term the Internal Revenue Service (IRS) uses to indicate the home a taxpayer has lived in most of the time during a given taxation year or the only home a taxpayer owns. The classification of a taxpayer’s main home is important when considering gains resulting from selling a
What Is Maintenance Margin? Maintenance margin is the minimum equity an investor must hold in the margin account after the purchase has been made; it is currently set at 25% of the total value of the securities in a margin account as per Financial Industry Regulatory Authority (FINRA) requirements. Key Takeaways Maintenance margin is the
What Is a Majority Shareholder? A majority shareholder is a person or entity that owns and controls more than 50% of a company’s outstanding shares. As a majority shareholder, a person or operating entity has a significant amount of influence over the company, especially if their shares are voting shares. Voting shares give a shareholder permission
