The work of the Stock Exchange

Bibliographic data

Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter XV. The commission house

Collection:: Economics Books

432 THE WORK OF THE STOCK EXCHANGE them by methods already outlined, are erased and changed as the fluctuations in market prices or other factors necessitate. Margin in Points and Percentage.—Margin is often com- puted in points—that is, in the number of dollars per share which stock prices would have to decline before the margin became exhausted. Since Blank’s margin on his 390 long shares is $16,550.91, it amounts in even figures to $42 or 42 points on every single share of the long stock. In other words, every one of the 390 long shares would have to decline on the average 42 points (or $42 per share) before Blank’s margin would be exhausted. Margin may also be figured in percentages. Thus in Figure 57 Blank’s margin is stated to be 44%, because his equity of $16,550.91 bears that proportion to the total value of his long stock, $37,600. In very high- or very low-priced stocks, the percentage of the customer’s margin is especially important. If, for example, a customer happened to hold shares whose price stood at about $600 or $700 apiece, a 50-point margin would be insufficient and a 20-point margin might be perilous. On the other hand, if the customers’ shares were low-priced stocks, selling—Ilet us say—at $5 apiece, even a 10-point margin would be impossible, and a 3-point margin perhaps conserva- tive. In such cases the pgrcentage relation of the amount of the margin to the value of the shares would have to be reckoned. A customer might have a 5o-point margin on a $500 stock, and have only a 10% margin, and yet his margin on $5 stock would be 40% if it were 2 points. Thus it can be seen that the number of points of margin demanded by the broker varies with each individual case, and cannot be set at any one limited figure, either by law or by regulations of the Stock Exchange itself. It would be equally impractical to attempt to establish a fixed percentage between the margin and the value of the securities of which the customer is long or short. It is sig-

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