Margin is a financial term that carries different meanings depending on the context. In business, it refers to the profit a company earns after covering its costs, typically shown as a percentage of revenue.
In investing, margin is the amount an investor contributes as a deposit with a broker to borrow funds for purchasing securities, which can magnify both profits and losses.
In lending, margin represents the difference between the value of a loan and the collateral backing it, acting as a safeguard for the lender.
Understanding how margin applies in each context is important, as it influences financial outcomes, risk exposure, and decision-making across different financial activities.