The cost of short selling Term Paper Example | Topics and Well Written Essays - 3000 words - 1

The cost of short selling - Term Paper Example A short sale, in general, requires loaning a security and comprises two parties- the borrower and the lender. Stock lending can take place directly or through intermediate agents. The fee for lending is a factor of market demand and supply; low supply or high demand raises the fees. It is said that short selling also influences the market price of a stock; for this reason the regulatory bodies restrict short selling in times of depressed market conditions. Another argument that goes against short sale is the high costs associated with it in the form of margin interest, commission and bid/ask spread. Other than these short selling is also exposed to dangers like unlimited losses, uptick rule etc. Other proxies are available in the market such as options that can replicate short selling and are also said to be less costly. Short selling costs Collateral and margin requirements- Short selling a stock is the opposite of going long on a stock in a â€Å"margin account†. An investor borrows the shares from the brokerage firm. As the seller does not own the stock he has to furnish collateral such as T-bills or cash (AIMA Canada, 2007). These serve the margin requirements of short selling. The amount which the investor has to deposit in the account at the point of initiation of sale is known as ‘initial margin’. ... a total of $13500 (Investopedia, 2010). Bid and ask spread- In a stock quote there are two prices- bid and ask. In the case of a short sale an ordinary investor sells the security at the bid rate. For this kind of investor the broker transmits the order to the stock exchange. At this point the market maker or specialist sells the stock and makes a profit equivalent to difference between the bid and ask rate referred to as ‘spread’. Suppose the bid and ask of Microsoft is $25.95 and $26.05 respectively. Then on a short sale the market maker will enjoy a spread of 10 cents. The profits earned on each trade may be small but the market maker can make huge profits in the case of bulk trading volumes. The amount shelled out as ‘spread’ is borne by the ordinary investor. The ordinary investors fail to realize this and place trade using market orders. In this kind of trade an investor may not get a good return on trade. Margin interest- Most of the firms charge an i nterest on the amount of securities shorted in an account. Going by the low rate of interest this may appear to be small but this can in due course add up with time. Suppose if an investor shorts $8000 worth of security ABC and the interest charged on the account is 6 percent then the investor will have to pay $480 as fees for that year. In the case of highly liquid stocks an investor can also ask for waiver of margin interest. Commissions- The amount paid as commission varies as per discount brokerage firms and full service. An investor has to pay a higher rate of commission in the case of full service brokerage on account of the personal counselling and guidance. But this may not prove to be always

The mirror has two faces Movie Review Example | Topics and Well Written Essays - 1250 words

The mirror has two faces - Movie Review Example The Mirror Has Two Faces is about different views people hold about love,sex,relationships and marriage.The title represents how different insights are seen on the same topicwith the â€Å"mirror† being the topic of love and relationships and the â€Å"two faces† being the different views held by the characters of the movie,mainly Rose and Gregory. A mirror is supposed to be a reflection of the person standing in front of it, and the title of the movie mentions that it has two faces, most probably the person and its reflection, but these faces are not necessarily one and the same person thinking the same thoughts. Hence, the title makes one curious as to what it truly means. The characters’ ideas about sex, love, and marriage: The characters of the movie hold various perspectives on sex, love and marriage. Alex holds romantic views and showers Claire with affection to the point that it suffocates her. To him, he is like a romantic hero. Claire is so bent on using her beauty to attract men but when she gets them, she easily gets tired of them and is searching for another pursuit to keep her excited and interested. Hannah is kind of self-obsessed that to her, love should center on her own happiness and should boost her self-esteem. Henry is more down to earth and is a sounding board to Gregory’s ideas on love and sex and has a more grounded belief that a balance should be struck in order for a relationship to work, although he himself dates younger women not for their intelligence but mostly for their physical appeal. The central characters of Rose and Gregory provide the conflict in the story. For Rose, a romantic relationship should be fueled by passion and romance to support the deep love that the couple has for each other. They should know each other very well, including seemingly insignificant details and should be able to respond to each other’s needs even if help is not solicited. Gregory, on the other hand, burned severa l times from his previous romantic relationships, believe that sex complicates matters. He believes that relationships based on romantic love and physical attraction are worthless because it creates illusions that eventually end up disappointing people because they cannot keep up to the expectations of each other. Where the chief characters are on their relationship journey. The Whiteheads describe marriage both as an institution and as a journey. In the movie, marriage as an institution was not clearly agreed upon by the characters and was not depicted in such a way that it is a solid, immovable establishment. Instead, it would be more appropriate to describe the main characters’ marriage as a journey of friendship gone backwards. Theirs was founded on a deep friendship without the physical affection most man-woman relationships share even before marriage. Gregory claims that they are lucky to have reached their level of relationship to have skipped sexual tension and have g one straight to a meeting of minds and hearts. On the other hand, Rose thought differently. For her, the journey was just beginning and sexual intimacy is a necessary part of the journey towards the marital union, in the truest sense of the word. After they have cleared things with each other of what to expect from their marriage and are now looking at the same road and destination, they anticipate a smoother journey together with all the necessary ingredients to make their marriage stronger. The styles of communication & conflict used by the couples. It has always been known that communication is a key to successful relationships. In the movie, there were various communication styles that reflected the views of the characters. There were scenes wherein Gregory would voice out his passionate beliefs in his theories about a sexless relationship because it does not complicate matters and elevates the relationship to a higher level of respect, trust, admiration. Rose cannot put one wor d in. Because Rose was in love with Gregory, she tried to accept his beliefs, shunning aside her