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What Is the Rationale for Different Margin Requirements on Different

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What is the rationale for different margin requirements on different types of securities? (For example, 50 percent on common stock, and 30 percent on bonds)


Definitions:

Payback Period

The length of time it takes for an investment to generate enough cash flow to recover its original cost, a measure of investment risk.

Investment Project

A project that allocates capital with the aim of generating returns over time, often involving infrastructure, real estate, or other assets.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual increments.

Net Present Value

The disparity between the current value of cash inflows and outflows over a specific timeframe.

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