Legal Definitions - margin stock

A margin stock is a type of security that can be used as collateral for a loan. A security is something that shows ownership or creditor rights in a company or government. It can be a stock, bond, or other type of investment.

For example, if you own shares of a company's stock, you can use those shares as collateral to borrow money. The lender will hold onto the shares until the loan is repaid. If the borrower can't repay the loan, the lender can sell the shares to get their money back.

Another example of a security is a bond. A bond is a type of loan that a company or government issues to raise money. The bondholder is the creditor and the company or government is the debtor. The bondholder receives interest payments and the principal amount back when the bond matures.

Overall, a margin stock is just one type of security that can be used as collateral for a loan. It's important to understand the risks and benefits of using securities as collateral before making any decisions.