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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. 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?
Expert Solution
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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