What is security margin?

A security margin refers to the difference between the actual value of an asset and the minimum value that is considered acceptable or safe. In finance, it often pertains to investments, where a higher margin indicates a greater buffer against potential losses. This concept helps investors assess risk and make informed decisions by ensuring they have a cushion in case of market fluctuations. In a broader context, it can also apply to various fields, including engineering and safety standards, where it denotes the additional capacity built into a system to handle unexpected stresses or failures.