Effective margin


Effective margin (EM)

Used with SAT performance measures, the amount equal to the net earned spread, or margin of income, on assets in excess of financing costs for a given interest rate and prepayment rate scenario.

Effective Margin

The profit margin produced from an asset if one assumes financing at a certain interest rate. That is, one calculates potential profits as if income remains constant but cost of funds varies. See also: Effective yield.