OK, I have some newbie questions. How does share financing work?

1. Lets say I have $10k worth of shares in my account. Will I be given another $10k of margin to buy stocks?

2. If I buy $20k worth of shares, and these are bought with $10k in cash and $10k in margin financing. So comes T+3, do I settle $10k or $20k?

3. Is the interest rate charged on the financing a monthly rate or annual rate?

4. If I share finance $10k to buy $10k worth of shares, what will happen when the share price drops to $8k? Do I have to top up cash $2k? If the shares rise back to $10k, will I get back my $2k?

5. Can I just pay the interest alone, or do I have to interest + principal (like a loan installment)?

This post has been edited by simplesmile: Apr 18 2009, 07:58 AM

Some experts are talking about a second economy dip early 2010. After missing out on the dip in early 2009, this time around I am eager not to miss the 2010 dip (if it ever happens).

Some of you have taken out share margin financing and bought stocks on the cheap. And I believe these people have made handsome capital gains. I have some questions about share margin financing.

1. Is it a requirement to transfer my existing shares to the bank offering me the share margin financing facility? Can I get any facility without transferring my existing shares?
2. If I bank in cash as my collateral, can i use the CASH + Margin for trading, or just allowed to use the Margin only?
3. How much margin can I get with lets say 10k cash & 100k stocks as collateral?
4. Is the interest rate BLR minus, or BLR plus? which bank offers the cheapest rate?
5. Is share margin financing the same as share financing?
6. What's the opposite of a share cash account?

This post has been edited by simplesmile: Nov 28 2009, 12:54 PM

Thanks for taking the time to answer me.

For Q2: If I bank in 40k cash, I can trade 100k. Do I have to settle this 100k on T+3? Or can I just carry on the loan and just pay the interest?

i see. thanks for the explanation.

Where to get the best deal now?

Got this from CIMB

Collaterals : Quoted Share, Cash or Fixed Deposit
Margin of Financing : Up to 60%
Financing Amount : Min: RM50,000 Max: RM5 million

What does this portion mean? If I want to borrow RM50,000 then I must put in cash of RM83,333? Then I get financing of RM83,333 x 60% = RM50,000 ?