© 2014 Shmoop University, Inc. All rights reserved.
 

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Minimum Maintenance

Definition:

For margin transactions, the minimum level of equity that the investor must maintain in the account. It is calculated based on the market value of the securities in the account. In simple terms, "equity" in an account means the market value of the securities minus the margin loan. "Maintenance" is a percentage of the market value. If the minimum maintenance percentage is 25% (and it is, but most brokerages have a higher requirement), the value of the account is $20,000 and the equity (market value minus loan) is $4,000 (this means that the margin loan was $16,000), you first multiply the market value by the minimum required percentage, or $20,000 X 25%, which is $5,000. Compare the equity ($4,000) to the required amount ($5,000). If the equity is less than the required amount, the investor must either sell some of the securities or deposit enough money to bring the account equity back to the minimum requirement.

Advertisement
back to top