Buy 100 100 Bulls Buy Low and Sell HighLong

Sell 125 80 Bears Sell High and Buy LowShort

Capital Gain = 25 Capital Loss = 20

Dividend During the period of the short sale

A B C Stock Lending Fee

Lends Borrows and Sells Buys B
Legal Owner Dealer Bid Ask
B has to pay Dividend to A Dividend Ask-Bid = Spread
Purchase at Bid and sale at Ask RTT
GOI Risk-less Rate Specilaist NYSE Profit
Monopolist Market Maker
Mukesh Ambani Risk-less Rate + Risk Premium Broker/Dealer
A
No risk No investment Positive Return
No risk Investment Return exceeding risk-less rate
 50
8
58
34
24

Bearish Institution/Investor/Dealer Bullish Institution/Investor/Dealer

B C
BSE NSE Have enough money to buy 100000 shares
Enough shares to make delivery
100 102.5
T+2 Settlement
Buy 100,000 Sell 100,000
pay more than 4% on Savings Accounts
Profit = 250,000 6 is better than 4
SLR 100 20 25
Rupee is largely convertible on the current account CRR 4 5
Not convertible on the Capital Account 76 70

FC 10000 Bid Offer

VC 2 2000 5000 Borrow Lend
UC 7 4 Lending Rate - Borrowing Rate = NIM
Bid Offer BP 100bp
25bp
LIBID LIBOR
LIMEAN A LIBOR + 20 bp A is more credit worthy than B
B LIBOR + 45 bp
LIBOR - 20 bp LIBOR Minus 20 bp
Loan 100000 LIBOR is 7% LIBOR + 50 bp
Rate 8% LIBOR is 8% 0
Semi-annual 4000 3750 1
4000 4250 2
4000
4000 Diversification Foreign Exchange Risk
4000 Do not put all your eggs in one basket
4000 75 INR per USD
4000 1,000,000

Local Currency Local Issuer Domestic Bond 1066666.667 84 INR per Usd
Local Currency Foreign Isssuer Foreign Bond 952381 66,667
Foreign Currency Any Issuer Eurobond -47619
 75,000,000
80,000,000
84 INR per Usd
Tax Evasion Outright Fraud earn 1 crore report 50 lakhs HK 2003 Minimum Brokerage
Tax Avoidance Law is Ambiguous Deliberately Misinterpret
Tax Planning Making best use of laws to minimize taxes Retail Rates Up
Institutional ratescame down
Withholding Tax TDS
Discount Broking
X .9X Full service brokers
Discount brokers
DSP Merrill Lynch Deep Discount Brokers
Kotak Goldman Sachs
JM Morgan Stanley
 Minimum Brokerage

nal ratescame down

Great depression Mutual Funds
Insurance Companies
Glass Steagall Act Invetment Morgan Stanley Custodians
or
Corporate Raiders Commercial JPM Right Money Goes Out
Right Securities Come in
JPM Gramm Leach Bliley Act
Right Securities Go Out
ICICI Bank Right Money Comes In
ICICI Securities
ICICI Home Finance
ICICI Life Insurance
ICICI General Insurance
ICICI Mutual Funds
75 INR per USD 75 INR

1 ADR = 1 Indian Share $1

1 ADR = 10 Indian Shares $10

45000
1:01 600 1 ADR = .1 Indian Shares
60