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MARGINAL ACCOUNT

MARGINAL ACCOUNT

The following terms are manage by the broker

  • Initial Margin
  • Maintaince Margin
  • Mark to Market
  • Marginal Call


Initial Margin:
The first time payment by the investor to the broker is called initial margin. The minimum initial margin is 50% which is paid by the investor to the broker.

Maintaince Margin:
The amount that should be reserved by the broker when the prices of the securities go towords the decline.

Mark to Market:
The profit and loss calculation on daily basis is called market to market.

Marginal Call:
When the prices of securities are decrease the broker call to the investor to pay some amount as a maintance margin is called marginal call.

Example:
total share amount                    100 share x 10(price) = 1000

invest
600 (owner)amount                     400(broker) amount

suppose price will decline of share
100 x 8 = 800(amount)         price = 8
100 x 6 = 600                      price = 6
100 x 5 = 500                      price = 5
 and 440 amount

When the price will 440 the broker will call to pay 200 amount and remain the broker price will be 240 and if the price amount will be 300 then again broker will call to give 240 amount and after pay 240 the investor money will remain only 60 and all loss face by the investor.


INVESTMENT AND PORTFOLIO MANAGEMENT
INVESTMENT VS SPECULATION AND GAMBLING
TYPES OF INVESTOR
INVESTMENT COMPANIES
TYPES OF MUTUAL FUNDS
TYPES OF BONDS FUNDS
MONEY MARKET FUNDS
SECURITIES MARKET
TYPES OF INDEX
TYPES OF BROKERS
BROKER'S ACCOUNT
MARGINAL ACCOUNT
ORDER AND ITS TYPES
RISK AND ITS TYPES
RETURN PORTFOLIO ANALYSIS
RISK PORTFOLIO ANALYSIS
RISK AND RETURN OF AN INDIVIDUAL SECURITIES
ANALYSIS OF COMMON STOCK VALUATION
CAPM MODEL (CAPITAL ASSET PRICING MODEL)
MARKOWITZ MODEL


MBA NOTES INVESTMENT AND PORTFOLIO MANAGEMENT
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