Assume you shorted 100 shares of a stock at $37. Commissions are $25 per trade. The...

Assume you shorted 100 shares of a stock at $37. Commissions are $25 per trade. The company also paid a $.50 per share dividend. What is your dollar profit or loss if you close out the position when the stock trades at $34 per share.

Expert Solution

CALCULATION OF THE GAIN OR LOSS ON SALE OF SHARES

Selling price or Short Price (100 Shares X $ 37) =	$ 3,700
Less: Close out possition price (100 Shares X $ 34)=	$ 3,400
Less: Trade Commission ($ 25 X 2 Trade(1 Buy and 1 Sale)=	$ 50
Gain on on Transaction =	$ 250

Answer = Gain on Trade = $ 250


Note: This is a sale possittion so Dividend paid is not taken in considaration received,

jeff jeffy answered 1 year ago

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