About the WallStreet*E MARGIN ACCOUNT |
A margin account allows you to use your securities
as collateral for the purchase of more securities
or even for a personal loan (using personal checks). You
can use a marginal account to increase earning potential
in a bull market or as a short-term loan in a bear market.
Although you do pay margin interest for this privilege,
it is lower than many major credit cards.
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| Frequently Asked Questions on Margin |
Why
have a Margin Account?
What is
the difference between a margin and a cash account?
What is an example
of a Margin Account?
What will it
cost me?
Is there a
risk and is it worth it?
How do I open a
margin account?
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| Why have a Margin Account? |
Borrowing on margin allows you to
extend your WallStreet*E account, using your
securities as collateral for this loan. With this loan
you can:
- Purchase
Additional Securities:
This is the most common use of a margin
account.
- Increase Profit Potential: With
a margin account you are entitled to all the dividends
paid even if the stock is on margin.
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| What is the difference between a margin and cash
account? |
With a margin account, you do
not need one hundred percent of the purchase price deposited
in your account in order to purchase a stock. Stock that
you already own can be used a collateral to purchase additional
stock or even for a personal loan. In a cash account you
can only purchase securities with cash from your account
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| What is an example of a margin account? |
For example lets say you bought one hundred shares of
xyz stock for $5,000 in a cash account. In a margin account
you could buy another $5,000 of xyz stock giving you a
grand total of $10,000 of xyx stock ($5,000 on margin)
even if you only have $5,000 in your account.
Suppose that you had 5,000 to invest and picked a stock
selling for $50 that you thought was going up. Under a
50% margin rule you can buy 200 shares of the stock as
opposed to just 100 shared, with your $5,000 *. If the
stock goes up five points, you make $1,000 instead of
$500. If the stock goes down you would receive a margin
call.
* This does not include any
taxes, commissions, or margin interest which may be
due.
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| What will it cost me? |
Margin Lending Rates vary based on
the current Federal Reserve Broker Call Rate. Rates also
vary depending on the size and the volume of the account.
Please consult us for current rates and further details.
E-mail:info@wallstreete.com
Toll Free: 1-888-WALL-STE (1-888-925-5783)
Telephone: (888)-925-5783 or (305)-266-9120
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| Is
there risk and is it worth it? |
| As with any borrowing there is always risk. If the securities
that are held as collateral fall in price below certain
percentage you will receive a margin call. This means
you must make a deposit to increase your collateral. Always
use conservative estimates when investing in margin securities
and always take into account possible market fluctuations.
The interest rate is often comparable to, if not lower
than, the prime interest rate -- the rate offered by
banks to their best business customers. Gains in your
securities can pay this interest.
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| How do I open a margin account? |
First, request a new
account application and make sure you
specify that you want the ability to trade on margin or
contact
us.
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