An interest rate applied to a loan or margin extended by a broker. When an investor wishes to make a purchase that is in excess of the cash in hand, a brokerage firm will automatically provide access to additional capital. An interest rate will be applied to this extension of a loan, which compensates the brokerage firm for access to the capital.
Related information about margin interest:
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Roy Lewis sets the record straight on misconceptions and potential traps regarding investment interest and margin interest.
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