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Margin rate: 10.50 percent Margin trading: How it works Borrowing through a margin loan allows you to buy more of a security than you could with your available cash.
If the maintenance margin changed to 25%, then the customer would have to maintain a net value equal to 25% of the total stock equity. That means that he or she would have to maintain net equity of $50,000 × 0.25 = $12,500. At what price would the investor get a margin call? For stock price P the stock equity would be (in this example) 1,000P.
Margin loan rates for small investors generally range from as low as 6 percent to more than 13 percent, ... Could face a margin call. ... called the maintenance margin.
For instance, if you have $10,000 in your margin account, you might pay a base rate + 1.825%, while the borrower with $100,000 in an account pays the base rate + 0.325%.
Special memorandum account (SMA) [1] is a margin credit account used for calculating US Regulation T requirements on brokerage accounts. In addition to Initial Margin and Maintenance Margin requirements, the SMA ledger is used to lock in unrealized gains that augment the client's buying power. According to Regulation T, Section 220.5: [2]
Margin call to meet minimum equity: A day trading minimum equity call is issued when the pattern day trader account falls below $25,000. This minimum must be restored by means of cash deposit or other marginable equities. Deadline to meet calls: Pattern day traders are allowed to deposit funds within five business days to meet the margin call
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The broker, in turn, may borrow funds from a bank (with an agreement to repay the bank immediately on call). The broker has a base rate which is usually the Broker's call rate. The broker's rate is published daily in publications such The Wall Street Journal and Investor's Business Daily. Depending on the amount borrowed, the effective rate ...