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Amwelladmin (talk | contribs) (Created page with "What a creditor does to a debtor under a margin lending arrangement, if the value of the loaned assets drops in value. Here a “margin lending arrangement” could be a sw...") |
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What a | {{a|pb|}}{{d|{{PAGENAME}}|ˈmɑːʤɪn kɔːl|n}} | ||
What a [[prime broker]] does to a borrower under a [[margin lending]] arrangement, if the value of the assets it has lent against falls and the broker is worried there is not enough excess collateral value in the assets to cover a further sudden fall. | |||
For example, a broker lends 70 against an asset worth 100, on the condition that the asset always is worth at least 30 more than the loan.l (hence “[[loan-to-value]]” ratio). <br> | |||
If the stock falls to 90, broker “calls” for another 10 of margin. If the client fails to pay it, the broker can sell a portion of the asset to meet the call, restoring the 70% [[LTV]]. | |||
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. | ||
{{ | {{Pb margining capsule}} | ||
{{types of margin}} | |||
{{sa}} | |||
*[[Archegos]] | |||
*[[Margin]] | |||
{{ref}} | |||