Meaning of margin debt | Babel Free

Definitions

Money borrowed to purchase securities, using existing cash or securities as collateral.

countable, uncountable

Equivalents

Examples

“Avoid borrowing to invest: margin debt is what is getting many of those Chinese speculators into so much trouble, and making the rout in Chinese markets even worse than it might otherwise be, as forced selling pushes markets even lower.”

“With what’s commonly called margin debt, an investor buys $100 worth of stock by borrowing $50 from the broker, for example. Only $50 is the investor’s initial equity investment. If the stock price climbs to $120, the investor’s return is 40% because the $20 of profit came on $50 of investment. So margin debt amplifies returns.”

CEFR level