HAIRCUT

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A haircut is an extremely thin spread between the bid and ask prices of a given stock. It is also a situation in which a stock price gets reduced by a certain percentage for margin trades.

Better still, a haircut is the difference between prices at which a market maker can buy and sell a security or could be a percentage by which an asset's market value is reduced for the purpose of calculating capital requirement, margin and collateral levels.

Investdata Academy

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