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Thread: buy on margin

  1. #1
    Eartha is offline Member
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    Default buy on margin

    Dear all,

    How should I understand "buy on margin" underlined in the sentence below?

    Does it mean you buy with the money borrowed?

    Thanks in advance.

    Letís say you want to buy 1,000 shares of Acme Widget Corp., which is trading at $10 a share. You need $10,000, but you have only $5,000. No problem: You buy on margin.

  2. #2
    Barb_D's Avatar
    Barb_D is offline Moderator
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    Default Re: buy on margin

    You are moving into financial terms and need to start using financial sites. You're moving beyond most simple English explanations.

    When you buy on margin, you assume the price will go up.

    You buy those shares worth 10,000 thinking they will be worth 12,000 in a few weeks so you'll borrow the money to buy them based on the promise to sell them.

    Buying On Margin Definition

    I don't know how good this site is, but it has a dictionary.
    Investopedia.com - Your Source For Investing Education
    I'm not a teacher, but I write for a living. Please don't ask me about 2nd conditionals, but I'm a safe bet for what reads well in (American) English.

  3. #3
    SoothingDave is offline VIP Member
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    Default Re: buy on margin

    Excessive buying on margin was one of the reasons for the great stock market collapse in 1929.

  4. #4
    Eartha is offline Member
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    Default Re: buy on margin

    Quote Originally Posted by Barb_D View Post
    You are moving into financial terms and need to start using financial sites. You're moving beyond most simple English explanations.

    When you buy on margin, you assume the price will go up.

    You buy those shares worth 10,000 thinking they will be worth 12,000 in a few weeks so you'll borrow the money to buy them based on the promise to sell them.

    Buying On Margin Definition

    I don't know how good this site is, but it has a dictionary.
    Investopedia.com - Your Source For Investing Education
    I got it.

    Thanks Barb_D, the dictionary is very useful.

  5. #5
    Vidor is offline Member
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    Default not a teacher

    Not a financial expert but yes, it's my understanding that buying on margin means to buy on credit. A "margin call" is when you pay back the rest of the purchase price.

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