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Homework answers / question archive / On January 1, you sold short one round lot (that is, 100 shares) of Four Sisters stock at $21 per share

On January 1, you sold short one round lot (that is, 100 shares) of Four Sisters stock at $21 per share

Finance

On January 1, you sold short one round lot (that is, 100 shares) of Four Sisters stock at $21 per share. On March 1, a dividend of $2 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $15 per share. You paid 50 cents per share in commissions for each transaction. What is the value of your account on April 1?

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Computation of Value of Account on April 1:

Sale of Shares on January 1 (100 shares*$21) = $2,100

Less: Commission Paid on March 1 (100 shares*$0.50) = $50

Less: Dividend Paid on March 1 (100 shares*$2) = $200

Less: Purchase of Shares on April 1 (100 shares*$15) = $1,500

Less: Commission Paid on April 1 (100 shares*$0.50) = $50

Value of Account on April 1 = $300

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