Posted in Finance, Accounting and Economics Terms, Total Reads: 715
In case of buying securities sometimes the buyer falls short of money, in that case the buyer borrows money from a broker, this process is called as margin. It is a kind of speculation and can end into huge gains if the value of security increases and vice versa.
It is used to check the efficiency of the company and is calculated by dividing company’s profit by its total revenues.
For example: A, an investor buys 1000 securities of a particular company for Rs. 100 each, the price per security increases to 140 in six months, hence the profit comes out to be 40 per security and the margin as well becomes 40%.