How Margin Calls Work (Buying on Margin)
What happens when your leveraged position loses value
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Initial State
- You have $100 in cash.
- Your broker has $200 available to lend.
- You want to buy $200 worth of KKR stock, so you decide to borrow $100 from your broker.
👤
You (Investor)
person
Balance Sheet
in $000s
Assets
Cash
100
Total100
Liabilities
Total0
Equity
Net Worth
100
Total100
🏦
Your Broker
institution
Balance Sheet
in $000s
Assets
Cash Available
200
Total200
Liabilities
Total0
Equity
Capital
200
Total200
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