Apply for JIO IPO - India’s Mega IPO Is Here!

Apply for JIO IPO -

Angel One - Share Market Trading and Stock Broking
Skip to main content
Trading Terms

Haircut

This is a crucial concept to understand when dealing with securities, such as stocks, bonds, and derivatives. A higher haircut means a larger difference between the market value and loan amount, making it riskier for the lender. It is a way for lenders to protect themselves from potential losses and is often determined by the creditworthiness of the borrower.

Welcome to today's lesson on finance terminology. Today, we will be discussing the concept of a Haircut in the financial world. This term refers to the difference between an asset's market value and the loan amount. It is an important concept to grasp when dealing with securities like stocks, bonds, and derivatives. A higher haircut indicates a greater risk for the lender as there is a larger difference between the market value and loan amount. Lenders use haircuts as a way to safeguard themselves from potential losses, and the amount is typically influenced by the borrower's creditworthiness.

Related terms

Money Stop

Understand the meaning and definition of Money Stop in the context of stock market, trading, and investments.

MORE
Resting Order

Understand the meaning and definition of Resting Order in the context of stock market, trading, and investments.

MORE
Clustering

Understand the meaning and definition of Clustering in the context of stock market, trading, and investments.

MORE
Leg Out

Understand the meaning and definition of Leg Out in the context of stock market, trading, and investments.

MORE
Drawdown

Understand the meaning and definition of Drawdown in the context of stock market, trading, and investments.

MORE
Commercial Invoice

Understand the meaning and definition of Commercial Invoice in the context of stock market, trading, and investments.

MORE

Open Free Demat Account!

Join our 3.8 Cr+ happy customers

+91
Explore other categories
Enjoy Zero Brokerage on Equity Delivery
10 Cr+DOWNLOADS

Enjoy Zero Brokerage On Stock Investments

Get the link to download the App

Scan this QR code to download the app
Get it on Google PlayDownload on the App Store