Question

A few weeks ago, you shorted sell 100 shares of Gemini Inc. at $60 per share. Your dealer requires 50% initial margin with 25% maintenance margin. Today, the price of the stock is $71 per share. Given this scenario: (1) What is your Total Account Value today (i.e how much total cash and value of the shares are in your account) and (2) What is your Total dollar gain/loss on the shorted shares (ignoring fees, charges and margin)

A.

(1) Total Account Value: $10,100

(2) Total Dollar Gain/Loss: LOSS $ 1,100

B.

(1) Total Account Value: $9,000

(2) Total Dollar Gain/Loss: LOSS $ 1,100

C.

(1) Total Account Value: $7,100

(2) Total Dollar Gain/Loss: LOSS $ 1,100

D.

(1) Total Account Value: $9,000

(2) Total Dollar Gain/Loss: GAIN $ 1,100

E.

(1) Total Account Value: $9,275

(2) Total Dollar Gain/Loss: GAIN $ 1,100

You purchase 3M stock for $71 per share. The firm pays a dividend of $2.40 and the shares are now worth $119 per share.

What is the capital gain/loss return for this scenario?

		Cap Gains %: -3.38%
		Cap Gains %: +3.38%
		Cap Gains %: 67.6%
		Cap Gains %: +2.40%

Answer 1

The question pertains to short selling of shares and relevant losses/profits incurred due to the trade. The solution is as follows:

Question 01

Thus, Option A is correct.

Question 02:

Thus, Option C is correct.