should investors not be able to contribute additional equity or if the value of an account drops so fast it breaches certain margin requirements a forced liquidation may occur this forced liquidation will sell the securities purchased on margin and may result in losses to satisfy the broker s requirement 
example of marginlet s say that you deposit 10 000 in your margin account because you put up 50 of the purchase price this means you have 20 000 worth of buying power then if you buy 5 000 worth of stock you still have 15 000 in buying power remaining you have enough cash to cover this transaction and haven t tapped into your margin you start borrowing the money only when you buy securities worth more than 10 000 note that the buying power of a margin account changes daily depending on the price movement of the marginable securities in the account other uses of marginin business accounting margin refers to the difference between revenue and expenses where businesses typically track their gross profit margins operating margins and net profit margins the gross profit margin measures the relationship between a company s revenues and the cost of goods sold cogs operating profit margin takes into account cogs and operating expenses and compares them with revenue and net profit margin takes all these expenses taxes and interest into account adjustable rate mortgages arm offer a fixed interest rate for an introductory period of time and then the rate adjusts to determine the new rate the bank adds a margin to an established index in most cases the margin stays the same throughout the life of the loan but the index rate changes to understand this more clearly imagine a mortgage with an adjustable rate that has a margin of 4 and is indexed to the treasury index if the treasury index is 6 the interest rate on the mortgage is the 6 index rate plus the 4 margin or 10 45