Synopsis
Margin loans are a useful tool for gearing into share or managed fund investments. Fundamentally, they operate as a loan secured against a share or managed fund portfolio, where the lender is protected from falls in the security value by utilising a technique referred to as a margin call. This technical article investigates how margin loans work, at what point you might face a margin call, and gives you some tools for calculating what level of buffer you need to allow for in order to prevent a margin call.
Contents
- Synopsis
- Margin loan terminology
- Margin Utilisation
- Margin Call
- Summary
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