Margin Loan

Funds borrowed against a person's current deposits or investment balance. Financial institutions often allow their individual investors to borrow against the value of their individual portfolios, up to a percentage of their portfolio value--usually 50%. A drop in the stock market may lower the portfolio value, which would increase the ratio of margin loan. It if exceeds the limit, "margin calls" are made and private investors must immediately pay down their loan to bring it within limits.

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