Definitions from the Web
Margin Account
Description:
A margin account is a type of brokerage account where an investor can borrow funds from a broker to purchase securities. This allows investors to leverage their buying power and potentially increase their investment gains.
Senses:
- Financial Sense: A margin account is a financial account that allows investors to borrow money to trade securities.
Usages:
- Buying on Margin: With a margin account, investors can buy stocks, bonds, or other securities by borrowing money from a broker.
- Leveraging Investments: Margin accounts provide the flexibility to leverage investments by using borrowed funds alongside the investor's own deposited funds.
- Margin Call: In a margin account, when the value of the investor's account falls below a certain level, the broker may issue a margin call, demanding additional funds to cover potential losses.
- Short Selling: Margin accounts are commonly used for short selling, where investors borrow shares from a broker, sell them on the market, and aim to buy them back at a lower price later to make a profit.
Example Sentences:
- Financial Sense: In stock trading, utilizing a margin account allows investors to increase their potential returns.
- Buying on Margin: Sarah purchased 100 shares of a tech company using her margin account, leveraging her buying power.
- Leveraging Investments: James decided to invest in a diverse portfolio using his margin account, allowing him to increase his exposure to various asset classes.
- Margin Call: When the stock market crashed, Mark received a margin call requesting him to deposit additional funds into his account.
- Short Selling: Rebecca borrowed shares of a popular cryptocurrency through her margin account and sold them, expecting their price to drop in the near future.
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