On January 1, you sold short one round lot (that is, 100 shares) of Lowe's stock at $27.70 per share. On March 1, a dividend of $3.30 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $22.00 per share. You paid 25 cents per share in commissions for each transaction.

a. What is the proceeds from the short sale (net of commission) ?

b. What is the dividend payment?

c. What is the value of your account on April 1?

The calculation is shown below:

a. The proceeds from the short sale (net of commission) is

= Number of shares short sold x (price of short sale - commission paid per share)

= 100 shares x ($27.70 - 0.25)

= $2,745

b. The dividend payment is

= Number of shares * dividend per share

= 100 shares * $3.30

= $330

c. Value of an account is

= Proceeds from short sale, commission net - dividend paid - cost including commission

where,

Cost including commission is

= Number of shares short sold x (price of buying stock + commission paid per share)

= 100 shares * ($22 + 0.25)

= $2,225

So, the value of an account is

= $2,745 - $330 - $2,225

= $190