Margin:

Borrowing Money To Pay for Stocks

"Margin" is borrowing money from your broker to buy a stock and using your investment as collateral.
Investors generally use margin to increase their purchasing power so that they can own more stock
without fully paying for it. But margin exposes investors to the potential for higher losses. Here's what you
need to know about margin.

Understand How Margin Works

Let's say you buy a stock for $50 and the price of the stock rises to $75. If you bought the stock in a cash
account and paid for it in full, you'll earn a 50 percent return on your investment. But if you bought the
stock on margin paying $25 in cash and borrowing $25 from your broker you'll earn a 100 percent
return on the money you invested. Of course, you'll still owe your firm $25 plus interest.

BUYING STOCK ON MARGIN

Margin means buying securities, such as stocks, by using funds you borrow from your broker.
Buying stock on margin is similar to buying a house with a mortgage. If you buy a house at a
purchase price of $100,000 and put 10 percent down, your equity (the part you own) is $10,000,
and you borrow the remaining $90,000 with a mortgage. If the value of the house rises to
$120,000 and you sell, you will make a profit of 100 percent (closing costs excluded). How is
that? The $20,000 gain on the property represents a gain of 20 percent on the purchase price of
$100,000, but because your real investment is $10,000 (the down payment), your gain works
out to 200 percent (a gain of $20,000 on your initial investment of $10,000).

2.Firms and governments often use moral suasion and economic incentives to
influence intrinsic
and extrinsic motivations for various economic activities. To investigate the
persistence of such
interventions, we randomly assigned households to moral suasion and dynamic
pricing that
stimulate energy conservation during peak demand hours. Using household-level
consumption
data for 30-minute intervals, we find significant short-run effects of moral suasion,
but the
effects diminished quickly after repeated interventions. Economic incentives
produced larger
and persistent effects, which induced habit formation after the final interventions.
While each
policy produces substantial welfare gains, economic incentives provide particularly
large gains
when we consider persistence.

Firms at mga pamahalaan ay madalas na gamitin moral na panghihikayat at pang-ekonomiyang mga

insentibo upang maka-impluwensya intrinsic
at hindi kailangan motivations para sa iba't ibang pang-ekonomiyang aktibidad. Upang siyasatin ang
pagtitiyaga ng mga naturang
interventions, kami sapalaran itinalaga kabahayan upang moral na panghihikayat at dynamic na
pagpepresyo na
pasiglahin enerhiya pagtitipid sa panahon ng tugatog oras demand. Paggamit ng sambahayan sa antas
consumption
data para sa 30 minutong agwat, nakita namin makabuluhang maikling-run epekto ng moral na
panghihikayat, ngunit ang
epekto pinaliit mabilis matapos paulit-ulit na mga pamamagitan. Economic insentibo ginawa mas
malaki
at paulit-ulit na mga epekto, na kung saan sapilitan pagbuo ng ugali pagkatapos ng huling
pamamagitan. habang ang bawat
patakaran gumagawa makabuluhang mga nadagdag welfare, pang-ekonomiya insentibo nagbibigay
partikular na malaki nadagdag
kung ating titingnan pagtitiyaga.