Is "initial margin rate" equal to margin?

Question

In Bodie, Kane and Marcus, the term "initial margin percentage" seems to be used synonymously to "margin", which is the equity to total investment ratio (where total investment amount = equity + amount borrowed). Is this the case in actual finance?

Bob Baerker · Answer

Reg T margin for initial purchases in the USA is 50% (brokers can require more).  It is referred to as "initial margin" or simply "margin".

Buying Power = (Cash or Marginable Securities) / (Margin Rate)

(Market Value) - (Debit Balance) = Equity

Current Margin = Equity / (Market Value)

There are different calculations for Minimum Margin Maintenance Requirement as well as for Selling Short on margin.

Is "initial margin rate" equal to margin?

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