MARGIN ACCOUNT Definition

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MARGIN ACCOUNT (Stocks) is a leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

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PURCHASE AGREEMENT is a contract stating the terms of a purchase.

INVERSE is the opposite or reverse. An inverse relationship between two variables means that when one increases the other decreases.

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