A Margin Account is brokerage account, where the broker lends a customer money to buy securities. The loan is typically collateralized by the securities. This can be dangerous, because if stock value drops to low, the account holder must deposit more money or sell a portion of the stock. Additionally brokers charge a finance fee on Margin Accounts. Think of these as short-term loans. Many investors have gotten into trouble with Margin Accounts. If an investor is heavily margined and a massive stock market crash happens, it’s not a pretty scene.
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