easy access to a source of debt financing called brokers call loans. The act of taking advantage of brokers call loans is called buying on margin. Purchasing stocks on margin means the investor borrows part of the purchase price of the stock from a broker. The broker, in turn, borrows money from banks at the call money rate to finance these purchases, and charges its clients that rate plus a service charge for the loan. All securities purchased on margin must be left with the brokerage firm in street name, because the securities are used as collateral for the loan. The Board of Governors of the Federal Reserve System sets limits on the extent to which stock purchases may be financed via margin loans. Currently, the initial margin re- quirement is 50%, meaning that at least 50% of the purchase price must be paid for in cash, with the rest borrowed. The percentage margin is defined as the ratio of the net worth, or "equity value," of the account to the market value of the securities. To demonstrate, suppose that the investor ini- tially pays $6,000 toward the purchase of $10,000 worth of stock (100 shares at $100 per share), borrowing the remaining $4,000 from the broker. The account will have a balance sheet as follows:     Assets Liabilities and Owners Equity   Value of stock $10,000 Loan from broker $4,000 Equity $6,000     The initial percentage margin is   Margin     Equity in account Value of stock     $6,000 $10,000     .60   If the stocks price declines to $70 per share, the account balance becomes:     Assets Liabilities and Owners Equity   Value of stock $7,000 Loan from broker $4,000