PAY CALL Meaning and
Definition
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Pay call refers to the act of requiring an investor to make additional payments on a security or investment that they have previously purchased. These additional payments are typically requested when the market value of the security falls below a certain level or when the investor's initial margin payment is deemed insufficient.
A pay call is commonly seen in margin trading, where investors borrow money to purchase securities. In this case, the pay call is used to protect the lender or broker from potential losses due to market fluctuations. If the value of the purchased securities drops, the investor is required to pay additional funds to cover the decrease in value. This ensures that the investor maintains the initial agreed level of equity or margin account value.
The terms of a pay call can vary depending on the broker or lender. It may involve a fixed amount or a percentage of the original investment. Failure to meet a pay call can result in severe consequences, including liquidation of the investor's position or the addition of interest charges and penalties.
The main purpose of a pay call is to reduce the risk for the lender or broker and make sure investors maintain a sufficient level of equity in their margin accounts. It serves as a safeguard against potential losses and promotes responsible investing practices.
Common Misspellings for PAY CALL
- oay call
- lay call
- 0ay call
- pzy call
- psy call
- pwy call
- pqy call
- pat call
- pag call
- pah call
- pau call
- pa7 call
- pa6 call
- pay xall
- pay vall
- pay fall
- pay dall
- pay czll
- pay csll
- pay cwll
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