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Sept. 22, 2004

When you buy a stock on margin, you pay for part of the purchase and borrow the rest from your brokerage firm. For example, you may buy $5,000 worth of stock in a margin account by paying for $2,500 and borrowing $2,500 from your firm. To learn how margin trading works, the upsides and downsides, and the risks involved, read Margin: Borrowing Money To Pay for Stocks.

We have provided this information as a service to investors.  It is neither a legal interpretation nor a statement of SEC policy.  If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.

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