Gordon Gekko wrote:erifloss wrote:@Impunity, The Market value of your shares is valued at previous closing prices while the valuation after haircut is less by 25%. The valuation after haircut is normally used on instances when one is borrowing funds against the security so as to guard the lender against market fluctuations and is at times based on the spread or in developed markets when dealing in futures this is the amount that is normally locked in though the true amount or value locked is the market value.Most markets use 25%.
So don't get worried in any way the true value of your portfolio is 120k and not 103k, its just helping you know how much you can get on your portfolio as a security for any financing or the much you can lose on the basis of the spread.
Meaning I can take a loan to the value of my haircut?
Simply, a hair cut is the difference between market value and dues expected upon a
forced-sell.It depends on your assets' liquidity as well as market behaviour (eg. buy and sell volumes, price ranging/trending)
The broker gives a 17k haircut, he is informing @Impunity that in terms of immediate liquidity his 120k shares are worth 103k.
ie "
if you need cash urgently, we think we can get you 103k chap chap."This is just the broker's valid opinion.
Also, in my own opinion, if @Impunity went to a bank to borrow against his shares, they may give him a 40% hair cut and lend him 70-75k against the shares.
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