An investor shorts 100 shares of a stock when the share price is $50 and closes...
An investor shorts 100 shares of a stock when the share price is $50 and closes out the position one week later when the share price is $48. The stock pays a dividend of $1.5 per share during the week. Assume that the risk free interest rate is zero. How much does the investor gain?
Homework Answers
Investor gain = ($50 * 1,00) - ($48 * 1,00) - (1.5 * 100)
= $5,000 - $4800 - $150
= $50
Investor gain = $50.
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