| purchasing power (def. 1). |
| 1. | Also called buying power. the ability to purchase goods and services. |
| 2. | the value of money in terms of what it can buy at a specified time compared to what it could buy at some period established as a base: the purchasing power of the dollar. |
Buying Power
The money an investor has available to buy securities. In a margin account, the buying power is the total cash held in the brokerage account plus maximum margin available.
Also referred to as "Excess Equity."
Investopedia Commentary
For example, if you had $1000 cash in a margin account and the maximum margin rate is 50%, then your total buying power is $2000. For a non-margin account, the buying power is equal the amount of cash in the account.
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Margin Trading Tutorial
See also: Cash, Leverage, Margin Account
buying power
The amount of liquid funds available for investing. A large amount of buying power indicates that significant funds from investors are available to fuel a bull market.
The funds in an investor's brokerage account that may be used for purchasing securities. An investor's buying power includes cash balances plus the loan value on securities held in the account.
purchasing power
Consumer ability to purchase goods and services. Increased purchasing power represents proportionately larger increases in income than increases in the cost of goods and services.
The ability to purchase goods and services with a fixed amount of money. Within this narrower application, purchasing power is inversely related to the consumer price index. Increased purchasing power is a signal that future increases in economic activity are likely.