Guide to Analysing Companies

Marché à terme des instruments financiers
France’s successful financial futures exchange, commonly
known as the matif, established in 1996. As well as futures
in traditional agricultural products such as wheat, the matif
enables buyers and sellers to trade in a range of financial
futures and options on interest-rate contracts in
euros. The matif is owned by euronext, a pan-European
company that owns several stock and futures exchanges.
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Margin account
An account which an investor holds with a broker, allow-
ing it to buy securities on credit. An investor with such
an account pays only a certain percentage of the market price
of the securities; the balance is borrowed from the broker
whose collateral is the value of the securities held in the
account. The minimum amount that must be held in such an
account is called the margin requirement. Such arrangements
are fine while the prices of the securities in the account are
stable or, better still, rising. The opposite is true when they
fall in value. To cover the cost of borrowings from the
broker, an investor has to sell part or all of the securities in
the account. In falling markets this can be tricky, because the
more an investor sells, the more likely it is that the price of
the security will continue to drop in value. (See margin
call.)
Marginal cost
The cost incurred by adding one more unit of a product or
service. A firm that is selling many financial services (loans,
insurance contracts, unit trusts or securities, for
example) may well be able to sell one more unit at virtually no
extra cost beyond that of the few pieces of paper needed to
record the transaction. Marginal cost is quite different from
average cost, which is the total cost involved in providing
the product or service divided by the number of units sold. 
Margin call
A demand for extra money from a broker to an investor who
has not paid the full amount owed for investments held in a
margin account. The demand may arise because the
market price of the investment has fallen, triggering a need to
reduce the amount of the loan extended to the investor. Most
such loans are extended when the account is opened to enable