buy on margin

[Eartha]

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.

Let’s 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.

 

[Barb_D]

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

 

[SoothingDave]

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

 

[Eartha]

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.:-D

 

[Vidor]

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.