Perry Mehrling - Dealer Capital

The video tutorial explores two types of capital dealers: a 100% capital dealer and a 0% capital dealer. The 100% capital dealer buys securities when prices are low and sells when prices are high, similar to Warren Buffett's strategy. The 0% capital dealer facilitates a two-way market, allowing for quick buying and selling without affecting prices, by holding both long and short positions to hedge risks. The tutorial explains the concepts of outside and inside spreads, liquidity, and the role of the repo market in financing securities positions. It concludes by discussing the importance of risk management and determining the necessary capital for imperfect hedges.

What role does the money market play in financing long securities positions?

Discuss the implications of having no perfect hedge in capital dealing.