Ask Question
9 October, 04:33

An investor sells 100 shares short at $43. The sale requires a margin deposit equal to 60 percent of the proceeds of the sale. If the investor closes the position at $49, what was the percentage earned or lost on the investment? If the position had been closed when the price of the stock was $27, what would have been the percent earned or lost on the position? (ignore any dividends, interest or commissions that would normally apply in a short sale)

+1
Answers (1)
  1. 9 October, 06:55
    0
    What would have been the percent earned or lost on the position is 23.2%

    Explanation:

    Proceeds of the sale $43 X 100 = $4,300 Margin requirement:.6 x $4,300 = $2,580

    When the price of the stock rises to $49, the investor loses $600 ($4,300 - $4,900). ThereforeThe percentage lost on the invested funds is ($600) / $2,580 = (23.2%).
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “An investor sells 100 shares short at $43. The sale requires a margin deposit equal to 60 percent of the proceeds of the sale. If the ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers