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Business Definition for: margin
margin

  1. see gross margin ; profit margin .
  2. partial payment made by an investor to a broker for securities purchased, with the remainder on credit. The broker retains the securities as collateral and charges the investor interest on the money owed. The Federal Reserve Board determines margin requirements. The margin requirement for stocks is higher than that for convertible bonds because of greater risk. Assume that with a margin requirement of 50% (present requirement), 100 shares of XYZ stock are bought at $100 per share. The actual amount invested is $5000, with a margin of $5000 on credit.
  3. in commodities trading, deposits required by commodities exchanges.
  4. in accounting, a reference to revenue or profitability. Examples are gross profit margin (gross profit/sales) and profit margin (net income/sales).

margin

In general: amount a customer deposits with a broker when borrowing from the broker to buy securities. Under Federal Reserve Board regulation, the initial margin required since 1945 has ranged from 50 to 100 percent of the security's purchase price. In the mid-1990s the minimum was 50% of the purchase or short sale price, in cash or eligible securities, with a minimum of $2,000. Thereafter, minimum maintenance requirements are imposed by the National Association of Securities Dealers (NASD) and the New York Stock Exchange, and by the individual brokerage firm, whose requirement is typically higher.
Banking: difference between the current market value of collateral backing a loan and the face value of the loan. For instance, if a $100,000 loan is backed by $50,000 in collateral, the margin is $50,000.
Corporate finance: difference between the price received by a company for its products and services and the cost of producing them. Also known as gross profit margin.
Futures trading: good-faith deposit an investor must put up when buying or selling a contract. If the futures price moves adversely, the investor must put up more money to meet margin requirements.

margin

Banking:

  1. Net Interest Margin , or the percentage difference between a bank's yield on earning assets (mostly loans) and interest paid to depositors.
  2. proportion of the asset pledged as security, for example, inventory or accounts receivable, that a bank will lend against. The difference between the market value and loan value is also called a haircut . If the collateral declines in value, additional margin will be required.
  3. premium a mortgage lender adds to an index rate in determining the loan interest rate in an adjustable-rate mortgage . This premium is typically two to three percentage points.

Futures:money or securities put up as a good faith deposit assuring that a future contract will be fulfilled. Also known as a security deposit, as in the initial margin and maintenance margin required when a futures position is open.
Securities:money deposited with a broker that serves as partial payment when purchasing securities. The Federal Reserve Board's Regulation T sets a maintenance margin , currently 50%, in purchases or short sales of securities. Margins may be put up in cash or eligible securities. Individual broker-dealers may impose higher margins in trades of over-the-counter securities.

margin

fluctuation in claims arising from adverse selection .

margin

Marketing:see gross profit ; markup .
Printing:space on a page between the copy and the edge of the page. The four margins are called, clockwise from the top, head margin, front margin, foot margin, and inside or back margin. bleeds are produced by printing into the margin up to or slightly beyond the point at which the paper sheet will be trimmed to page size. The gutter is the area between the margins of two pages on an untrimmed sheet.

margin

In general: amount a customer deposits with a broker when borrowing from the broker to buy securities.
Accounting: difference between gross and net amounts of income. See also margin of profit
.Banking: difference between the current market value of collateral backing a loan and the face value of the loan.
Communication: white space along borders of a printed page. See also footer ; header .
Corporate finance: difference between the price received by a company for its products and services and the cost of producing them. Also known as gross profit margin.
Economics: usefulness or cost of the next item.
Futures: good-faith deposit an investor must put up when buying or selling a contract. If the futures price moves adversely, the investor must put up more money to meet margin requirements.

margin

a constant amount added to the value of the index for the purpose of adjusting the interest rate on an Adjustable-Rate Mortgage .

Example: An adjustable rate mortgage is indexed to the 1 year Treasury yield and has a margin of 3 percentage points. If the index is currently 6%, the fully indexed rate on the loan is 9% (6% index plus 3% margin).

Copyright © 2005, 2000, 1995, 1987 by Barron's Educational Series, Inc., Reprinted by arrangement with Publisher.
Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2000, 1995, 1991, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright c 2000, 1994, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2004, 2000, 1997, 1993, 1987, 1984 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.

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