Assume stock loanable percentage at 70%
| Customer’s available capital | $30,000 |
| Maximum value of the designated stock that the customer can buy | $100,000 [$30,000/(100% – stock loanable percentage)] |
| If the customer buys the stock, the margin account portfolio will be as follows: | |
| Total Loan | $70,000 |
| Effective loanable value | $70,000 (Market value of the stock × stock loanable percentage) |
| Margin ratio( = Total loan / effective loanable value) | 100% (= $70,000 / $70,000) |
Scenario 1:
If the market value of that stock increases by 10% to $110,000
| Margin ratio | 90.91% (= $70,000 / $77,000) |
| Profit earned after the stock sold | $10,000 (excluding interest and transaction handling fees) |
| Rate of return | 33% (= $10,000 / $30,000) |
Scenario 2:
If the market value of that stock decreases by 17% to $83,000
| Margin ratio | 120.48% (= $70,000 / $58,100) |
| The stock will be sold by the Bank once the margin ratio reaches the sell-out level. | |
| The amount lost after the stock sold | $17,000 (excluding interest and transaction handling fees) |
| Rate of return | – 57% (= -$17,000 / $30,000) |
- If the margin ratio reaches 105%, customers are required to cover the excess so as to restore the required margin ratio to 100% or below. If margin ratio reaches 115%, “EGFGL” will begin to sell your stocks to restore the required margin ratio without prior notice.
- The required margin ratio is subject to change at the discretion of “EGEGL” from time to time.
- Stock loanable percentage may vary from 10% to 70% among stocks. For details, please contact our staff.
- In case of any discrepancy between the Chinese and English versions, the English version shall prevail.