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Short Sales of Stock

Assume you sold short 200 shares of GAP at $30 per share. What was your profit and rate of return, if after one year, GAP paid $.25 per share in dividends and you covered your short position when the price was $25 per share? Assume a 100% initial margin requirement.

Account at the time you sell the stock short: Assets and Liabilities

Account one year later: Assets and Liabilities

Solution Preview

Assume you sold short 200 shares of GAP at $30 per share.  What was your profit and rate of return, if after one year, GAP paid $.25 per share in dividends and you covered your short position when the price was $25 per share? Assume a 100% initial margin ...

Solution Summary

The solution calculates the profit on the short sales of stock. It also prepares the accounts at the time the stock is sold short and the account one year later.

$2.19