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