Using the information in the tables above (the Company, the Broker, and the Investor), solve the cash flows involved in the short sale of this company.  Then calculate the rate of return.             (Use cells A5 to B15 from the given information to complete this question.)                 Short Sale       Net Proceeds from Short Sale         Dividend Payment         Buyback Proceeds         Net Profit         Percent Return on Investment

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You are bearish on Sienar Fleet Systems, you sold short one round lot (100 shares) at $85 per share.  On March 1, a dividend of $2 per share was paid.  On April 1, you covered the short sale by buying the stock for the price of $70.  You paid $.25 per share in commissions for each transaction.
         
Sienar Fleet Systems      
Market Price, January 1 $85.00       
Market Price, March 1 $82.00       
Dividend, March 1 $2.00       
Market Price, April 1 $79.00       
         
Broker      
Commission, per Share $0.25       
Maintenance Margin 0.35      
         
Investor      
Shares Sold Short 100      
         
Required:      
Using the information in the tables above (the Company, the Broker, and the Investor), solve the cash flows involved in the short sale of this company.  Then calculate the rate of return.  
         
(Use cells A5 to B15 from the given information to complete this question.)      
         
Short Sale      
Net Proceeds from Short Sale        
Dividend Payment        
Buyback Proceeds        
Net Profit        
Percent Return on Investment        
         
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