Do I always buy stocks on margin in a margin account?
I'm trying to understand the logic of RegT margin accounts.
Let's assume that I have a ,000 account and I purchase stock XYZ worth ,000.
Will my broker automatically give me a loan of 50% (=2,500) for that position, so that I have a debit balance of 2,500? Or, because I have enough money, will I pay the full price for it without borrowing money?
In other words, do I always borrow money from my broker when buying a stock in a margin account?
(1)1 Comments
Sorted by latest first Latest Oldest Best
There is no margin involved until you use up the cash balance in your account.
In your example, you would not be on margin until your purchase exceeded k.
As a side note, if you have k in your account and you purchased k of a marginable security, your equity position would be marginable, enabling you to purchase another k of stock with that purchase.. Any combination of marginable securities and cash would allow you to purchase an equal amount of additional securities.
Terms of Use Privacy policy Contact About Cancellation policy © freshhoot.com2025 All Rights reserved.