Question

After researching Best Buy common stock, Sally Jackson is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 150 shares of Best Buy. At the time of the sale, a share of common stock had a value of $53. Three months later, Best Buy is selling for $55 a share, and Sally instructs her broker to cover her short transaction. Total commissions to buy and sell the stock were $82. What is her profit for this short transaction?

Answer 1

	Selling Price per share	=	$          53
Less:	Purchase price per share	=	$          55
(i)	Profit per share	=	$           -2
(ii)	Number of Shares	=	150
(i) X (ii)	Total Profit	=	$      -300
Less:	Commission paid to broker	=	$          82
	Net Profit	=	$      -382
	Therefore Loss from short transaction is $382