Margin requirements and volatility : evidence from Canadian stocks

Margin policy is used by regulators for the purpose of inhibiting exceSSIve volatility and stabilizing the stock market in the long run. The effect of this policy on the stock market is widely tested empirically. However, most prior studies are limited in the sense that they investigate the margin requirement for the overall stock market rather than for individual stocks, and the time periods examined are confined to the pre-1974 period as no change in the margin requirement occurred post-1974 in the U.S. This thesis intends to address the above limitations by providing a direct examination of the effect of margin requirement on return, volume, and volatility of individual companies and by using more recent data in the Canadian stock market. Using the methodologies of variance ratio test and event study with conditional volatility (EGARCH) model, we find no convincing evidence that change in margin requirement affects subsequent stock return volatility. We also find similar results for returns and trading volume. These empirical findings lead us to conclude that the use of margin policy by regulators fails to achieve the goal of inhibiting speculating activities and stabilizing volatility.

The effect of diet and parasite load on female phonotaxis in the Texas field cricket, Gryllus integer

Female crickets respond selectively to variations in species-specific male calling songs. This selectivity has been shown to be age-dependent; older females are less choosy. However, female quality should also affect female selectivity. The effect of female quality on mate choice was examined in Gryllus integer by comparing the phonotactic responses of females on different diets and with different parasite loads to various synthetic models of conspecific calling song. Test females were virgin, 11-14 days old, and had been maintained on one of five diets varying in protein and fat content. Phonotaxis was quantified using a non-compensating Kugel treadmill which generates vector scores incorporating the speed and direction of movement of each female. Test females were presented with four calling song models which differed in pulse rate, but were still within the natural range of the species for the experimental temperature. After testing, females were dissected and the number of gregarine parasites within the digestive tract counted. There were no significant effects of either diet or parasitism on female motivation to mate although the combined effects of these variables seem to have an effect with no apparent trend. Control females did not discriminate among song types, but there was a trend of female preferences for lower pulse rates which are closest to the mean pulse rate for the species. Heavily parasitized females did not discriminate among pulse rates altho~gh there was a similar trend of high vector scores for low pulse rates. Diet, however, affected selectivity with poorly-fed females showing significantly high vector scores for pulse rates near the species mean. Such findings raise interesting questions about energy allocation and costs and risks of phonotaxis and mate choice in acoustic Orthoptera. These results are discussed in terms of sexual selection and female mate choice.