Formula:
( Purchased Value Minus
Cash ) Divide /
(market value for: share and
margined share value ) x 100%
Case for illustration:
Cash : RM100k into margin ac.
Max can margin (loan ) : 1.2times aka Rm120k
Total share value can buy Rm220,000 (RM100k plus RM120k)
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Example of : No Loan
If you put in Cash Rm100k
; and bought RM100k share only.
You did NOT loan.
Hence: No interest charge.
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Example: If borrow 20k:
If you put in RM100k; bought RM120k share; you borrow RM20k loan for buying share
Margin level:
(120k -100K = 20k )
Divide/ ( Rm120k )
x 100% = 16.6%
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Example: Use Maximum Rm220k
If you put in RM100k; bought RM220k share; you borrow RM120k loan for buying share
Margin level:
( 220k - 100k = 120k )
/ ( Rm120k
+ Rm100k ) x 100% =
54%
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Example: Use 80% of Rm120k(max margin or loan) = Rm96000
If you put in RM100k; bought RM196,000 value share; you borrow RM96k loan for buying share
Margin level:
( RM196,000 - RM100,000
) /
(
Rm196,000 ) x 100% =
48%
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Example: Use 50% of Rm120k(margin margin or loan) = Rm60,000
If you put in RM100k;
bought RM160,000 value share; you borrow RM60k loan for buying share
Margin level:
( 160k – 100k = Rm60k )
/ ( Rm160,000 ) x
100% = 37.5%
