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initial margin requirement

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Financial Dictionary

initial margin requirement

The minimum portion of a new security purchase that an investor must pay for in cash. For example, with an initial margin requirement of 60%, the most an investor can borrow is $2,000 on a $5,000 purchase. This requirement is determined by the Federal Reserve Board. Also called margin requirement.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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