Margin Call

Economics Glossary – Malone Global University

Definition

A broker’s demand that an investor deposit additional funds or securities when the value of a margin account falls below the required minimum.

Why It Matters

Margin calls prevent lenders from bearing excessive risk and can force rapid asset sales that amplify market volatility.

Example

If stock prices fall sharply, an investor trading on borrowed funds may receive a margin call requiring immediate cash.

Related Terms

Back to Glossary