Assume you sell short 1,000 shares of common stock at $35 per share. What would be...

Assume you sell short 1,000 shares of common stock at $35 per share. What would be your profit if you repurchase the stock at $25 per share? The stock paid no dividends during the period.

	A.	$10,000
	B.	-$5,600
	C.	$5,600
	D.	-$10,000.
	E.	$12,600

Solutions

Expert Solution

Sale value = Shares * price

Sale value = 1,000 * 35

Sale value = $35,000

Purchase value = 1,000 * 25

Purchase value = $25,000

Profit = Sale value - purchase value

Profit = $35,000 - $25,000

Profit = $10,000

jeff jeffy answered 1 year ago

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