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
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
Section: Chapter Questions
Problem 1PS
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Question
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 |
||||
(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 |
||||
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