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A short seller has sold 300 shares at $210 per share with an initial margin of...

A short seller has sold 300 shares at $210 per share with an initial margin of 60%. A few days later the stock paid $4 dividends per share.

What is the profit to the short seller if the share price is now $180?

10,200

9,000

-10,200

7,800

Solutions

Expert Solution

The calculation of profit is shown below:

Profit =( Dividend per share*number of shares) +( capital appreciation*number of shares)

= ($4 * 300 shares) + [($210-$180)* 300 shares]

= $1,200 + $9,000

= $10,200

jeff jeffy answered 2 years ago
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