Reference no: EM131616071

The stock market plays a very important role in a nation's economy. It brings together savers and investors on one hand, and the borrowers on the other. It is an issuers' primary market in which new issues (Initial Public Offering - IPO) can be placed. Subsequent trading of shares takes place in the secondary market. Stocks and bonds are the most preferred way of investing money. Money can be made in stocks when companies make profits and distribute the surplus to shareholders in form of dividends. An investment in bonds on the other hand is a fixed-income security where interest is paid as per the contractual obligations. The word BOND had an origin in the phrase "my word is my bond" whereby a promise made verbally without a written contract was just enough to consummate an exchange of goods and or services. There was no need to provide written pledges. The rates of return on treasury bonds are very low but are extremely secure and have low transaction costs, and in some states and local authorities, they are exempt from taxes. The motivation and strategy behind buying and selling stocks can create some ethical dilemmas. One such strategy is short selling commonly referred to as "buy low, sell high". What ethical issues can arise in short selling? Would you engage in short selling? Please discuss.