Purchasing power;
In economics: is the value of money as measured by the goods and services it can buy, and it plays a critical role in determining the standard of living of individuals and the overall growth of the economy.
Investment: In the context of a brokerage account, purchasing power refers to the amount of credit available to a client. The more credit available, the greater the purchasing power. However, this also means that the risk exposure of the account also increases as the leverage ratio increases.
Usually, under Federal Reserve Board Regulation T requirements, firms can lend a customer up to 50 percent of the total purchase price of a margin security for new purchases. For example, a client with purchasing power of $10,000 in his or her account could buy securities worth $20,000 under current Federal Reserve margin requirements.