The ‘initial margin’ is the minimum amount of capital the investor needs in his or her account to trade futures contracts, while the ‘maintenance margin’ is the subsequent capital amount he or she must contribute to the account to maintain the minimum margin requirements. Nasdaq’s Glossary ...
Margin accounts also require an amount of available cash or equivalent value known as a maintenance margin. This is a minimum balance that must be maintained to control the securities held in the account. Themaintenance marginfluctuates on a daily basis as the value of the securities in the acc...
A maintenance margin is set after the initial purchase. The Federal Reserve Regulation T sets this requirement at 25% although many brokerage firms require as much as 30% to 40%.2A maintenance margin of 25% means that a minimum equity amount must be valued at 25% or more of the margin a...
A company enters into a short futures contract to sell 5,000 bushels of wheat for 250 cents per bushel.The initial margin is $3,000 and the maintenance margin is $2,000.What price change would lead to a margin call?Under what circumstances could $1,500 be withdrawn from the margin ...
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1. Initial minimum: This is an initial balance that you’ll need to deposit into a margin account to purchase securities with a loan. It is usually at least $2,000 and needs to initially cover 50% of the total costs of the trade you want to make. 2. Margin maintenance requirement: ...
Here is a more in-depth explanation of what each of these components means: Product price: This includes the total cost of sourcing the raw materials and manufacturing the product, plus the seller’s profit margin, i.e., the final price sold to consumers. Freight costs: This encompasses ...
These loans can have a high degree of risk: If the value of your portfolio falls below the minimum maintenance dollar requirement, you will need to raise the equity in your account to meet a margin call. You must deposit more money to pay down the loan balance, deposit additional securities...
What Is Margin in Futures Contracts and How Is It Different For Forward? Margin in futures contracts refers to the initial deposit required to enter into a contract, as well as the maintenance margin needed to keep the position open. This system of margining helps manage the risk of default...
In addition, investors must meet a maintenance margin requirement set by their brokerage firm. That's the amount of equity they need to have in their margin account at all times, and it is calculated by subtracting the money they owe their broker from value of the cash and securities in th...