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Margin call: Difference between revisions
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What a creditor does to a debtor under a margin lending arrangement, if the value of the loaned assets drops in value. | What a creditor does to a debtor under a margin lending arrangement, if the value of the loaned assets drops in value. | ||
:I lent you 70 against an asset worth 100, on the condition that the asset would be worth 30 more than my loan. <br> | |||
:The Asset has fallen in value to 90. <br> | |||
:I therefore call you for 10 of margin. <br> | |||
Here a “margin lending arrangement” could be a [[swap]], [[future]], [[stock loan]] or [[margin loan]] — any financial transaction where there one party invests in an asset on terms on which the other party (effectively) finances it. | Here a “margin lending arrangement” could be a [[swap]], [[future]], [[stock loan]] or [[margin loan]] — any financial transaction where there one party invests in an asset on terms on which the other party (effectively) finances it. | ||
{{types of margin}} | |||
===Legal forms=== | |||
Popular ways of calling for [[margin]] include the [[Credit Support Annex]] to an ISDA, | |||
{{ | {{seealso}} | ||
*[[[Credit Support Annex]] | |||