Assume that an investor opens a 300-share short position in XYZ common stock at $30.21 with...

Assume that an investor opens a 300-share short position in XYZ common stock at $30.21 with commission of 0.55%. When you close your position the stock price is $29.76 and you have to pay a commission rate of 0.55%. Calculate the investor's profit on this short investment (assume r=0).

Expert Solution

Net Profit on Investment = Net Sales Proceeds(after deducting Brokerage) - Net Paid for Puchasing Back(after adding brokerage)

= [(30.21*300)-0.55%]-[(29.76*300)+0.55%]

= 9013.1535-8977.104

= $36.05

jeff jeffy answered 2 years ago

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