Maintenance margin

Definition:

For derivative contracts, when the margin drops below the maintenance margin, the investor gets a margin call. The investor must post margin to the initial margin (which is higher than the maintence) or the contract will be liquididated.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Deficiency Agreement

An agreement that calls on the sponsor or another party to provide the shortfall when cash flow, working capital, or revenues are below agreed levels or are insufficient to meet debt service.

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