selling short sell with commissio

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Question

Selling short. Assume that you sold short 100 shares of the stock. Assume that you sell short on the first day of Week 1 and buy back the stock on the last day of Week 4. Because a short sale involves borrowing, the margin rules apply: assume that the margin requirement is 50% and that the maintenance margin is 30%. Track the price of the stock each week, noting the market price of the stock and your potential loss at the end of each week. Calculate the return on your short sale transaction, assuming a commission on buying and selling of 0.5% of the market value of the stock. Be sure to factor in any dividends paid on the stock during the four-week period and the interest paid on the borrowed funds. Show your calculations. very important to show the calculation Jan 07 2014 01:20 PM

 

Solution ID:609046 | This paper was updated on 26-Nov-2015

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