A very simple question regarding shares and how share prices change.

Chris_English

ColdIron said:

You're ignoring trading costs and stamp duty?

Which would be completely standard when accounting for investments.

What stamp duty are you thinking of, by the way?

BrockStoker

ColdIron said:

BrockStoker said:

ColdIron said:

You're ignoring trading costs and stamp duty?

Yes, just for this example. I don't want to over complicate.

OK. How about the bid ask spread?

To buy at £10 the sell price will be lower, let's say £9.90

To then sell at £10 the buy price will be higher, say £10.10

So the share price will have to rise to achieve parity. I wonder how many real world factors you can remove before it becomes meaningless

But at its simplest, if your buy contract note says 10 * £10 your cash account will be £100 lighter. If your sell contract note says 10 * £10 your cash account will be back to where it started

Point (it's a good one) taken about bid/ask spread.

But, as you say it basically comes down to "if your buy contract note says 10 * £10 your cash account will be £100 lighter. If your sell contract note says 10 * £10 your cash account will be back to where it started"

BrockStoker

Thanks to all for your replies. I think the penny has now dropped

Thrugelmir

Chris_English said:

ColdIron said:

You're ignoring trading costs and stamp duty?

Which would be completely standard when accounting for investments.

What stamp duty are you thinking of, by the way?

0.5% on purchase of UK shares. .

France charges a financial transaction levy of 0.3%. 

Other countries likewise operate Financial Transaction Taxes of some kind. 

Cus

I guess it also depends on whether the share is an order book on an exchange or it has market makers?

Thrugelmir

Cus said:

I guess it also depends on whether the share is an order book on an exchange or it has market makers?

The FTT will have to be paid in order to register the transfer/new ownership of the shares with the company registrar. 

Cus

Thrugelmir said:

Cus said:

I guess it also depends on whether the share is an order book on an exchange or it has market makers?

The FTT will have to be paid in order to register the transfer/new ownership of the shares with the company registrar. 

Don't know what FTT is. You know more, I was just referring to whether a price has a bid/offer spread or its driven off an electronic order book where bids and offers match off.

Ifts

Cus said:

Thrugelmir said:

Cus said:

I guess it also depends on whether the share is an order book on an exchange or it has market makers?

The FTT will have to be paid in order to register the transfer/new ownership of the shares with the company registrar. 

Don't know what FTT is. You know more, I was just referring to whether a price has a bid/offer spread or its driven off an electronic order book where bids and offers match off.

Financial Transaction Tax

Thrugelmir

Cus said:

Thrugelmir said:

Cus said:

I guess it also depends on whether the share is an order book on an exchange or it has market makers?

The FTT will have to be paid in order to register the transfer/new ownership of the shares with the company registrar. 

Don't know what FTT is. You know more, I was just referring to whether a price has a bid/offer spread or its driven off an electronic order book where bids and offers match off.

Financial Transfer Tax.