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You know that a 7% margin rate is not that bad at all for a customer. Also,
brokers do not necessarily work on the spread between what you pay for a
margin rate and what they pay on a cash balance (cash balances are generally
in a money fund).
The brokers spread on margin rates is the difference between what they pay for
a broker's call loan rate and what they charge you. I do not know what the
call loan rate is, but if you have a debit balance at a major brokerage house
of less than $50,000, the going margin charge is 10 1/2%. The lowest rate
they charge is in the area of 8 1/2% for margin balances in excess of
$1,000,000.
Just wanted to clear up what appears to be a misunderstanding of broker
spreads.
Jerry
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