A short seller has sold 200 shares at $180 per share with an initial margin of...

Question

Question

A short seller has sold 200 shares at $180 per share with an initial margin of 60%. A few days later the stock paid $4 dividends per share.

What is the profit to the short seller if the share price is now $160?

Answer 1

Answer #1

The calculation of profit is shown below:

profit= ( Dividend * number of shares) + (capital appreciation * number of shares)

=($4 *200) + [($180-$160)*200]

= $800 + $4,000

= $4,800

Answer 2

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