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Understanding Margin: Benefits and Risks


Review and update your knowledge of key margining concepts and calculations. Using various examples, this course will help you focus on advanced margin calculations, including those that can help you determine a client's margin buying power, or figure out how far the market value of a stock has to fall to trigger a margin call. The course concludes with a discussion of the benefits and risks of buying or selling securities on margin.

Please note: As of January 1st, 2012 this course will no longer be available for purchase.

  • Definition
  • Benefits & Risks

Margin Rates:

  • SRO Margin Rates
  • House Margin Rates

Margin Calculations for Long Stock:

  • Opening Buy Transaction
  • Effect on Margin of Security Price Increase
  • Effect on Margin of Security Price Decline
  • Effect on Margin of Change in Loan Value

Margin Calculation for Short Sale:

  • Opening Short Sale
  • Effect on Margin of Security Price Increase
  • Effect on Margin of Security Price Decline
  • Mark to Market

Lesson 2: Advanced Margin Calculations

  • Margin Buying Power
  • Covering Undermargined Positions
  • Margin Recovery by Selling Securities
  • Margin Recovery by Depositing Marginable Securities
  • Margin Balance After Removal of Stock
  • Calculation of Decline in Market Value of a Security that will Trigger a Margin Call
  • Concentration Calculation

Lesson 3: Benefits & Risks of

Client Suitability

Benefits of Margin:

  • Leverage
  • Interest Charges as a Fixed Cost
  • Competitive Interest Payments
  • Deducting Interest Charges from Personal Income Taxes
  • Flexible Repayment

Risks of Margin:

  • Negative Equity
  • Forced Liquidation of Securities
  • Placing the Margin Call
  • Interest Charges as a Fixed Cost
  • Stock Market Valuations
  • Excessive Use of Leverage
Quiz Format Online
Question Format Multiple Choice
Questions Per Quiz 20
Passing Grade 60%*
Attempts Allowed Unlimited*
Enrolment Period 6 months

* IMPORTANT: There is no maximum to the number of quiz attempts permitted, but only the first passing grade (60% or over) will appear on official web transcript.

Continuing Education (CE) Credits

Click the links below to access CE accreditation information. To search for specific course information, press Ctrl + F and then enter the course name to search the document for the information you are interested in.

National/Provincial (Excluding Quebec)
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Quebec (IQPF/CSF)
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Please note: While CSI makes every effort to ensure that the information is up-to-date, we are unfortunately unable to fully guarantee its accuracy. The information listed in the charts above may be subject to change.

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