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Short Sales Action or Formula Ending Return On For Column B ST Price Investment

This document contains a summary of a short sale transaction. It shows an initial investment of $50,000 used to short 1,000 shares of a stock priced at $100 per share. The stock price fell to $70 at the end. This resulted in a capital gain of $30,000 from the short sale. Dividends of $2,500 were also paid. After subtracting the dividends, the net income was $27,500. The return on the initial $50,000 investment was therefore 55%.

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31 views2 pages

Short Sales Action or Formula Ending Return On For Column B ST Price Investment

This document contains a summary of a short sale transaction. It shows an initial investment of $50,000 used to short 1,000 shares of a stock priced at $100 per share. The stock price fell to $70 at the end. This resulted in a capital gain of $30,000 from the short sale. Dividends of $2,500 were also paid. After subtracting the dividends, the net income was $27,500. The return on the initial $50,000 investment was therefore 55%.

Uploaded by

Alfie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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A B C D E F

1 Chapter 3
2 Short Sales Action or Formula Ending Return on
3 for Column B St Price Investment
4 Initial Investment $50,000.00 Enter data
5 Initial Stock Price $100.00 Enter data $170.00
6 Number of Shares Sold Short 160.00
7 Ending Stock Price $70.00 Enter data 150.00
8 Cash Dividends Per Share $2.50 Enter data 140.00
9 Initial Margin Percentage 50.00% Enter data 130.00
10 Maintenance Margin Percentage 30.00% Enter data 120.00
11 110.00
12 Return on Short Sale 100.00
13 Capital Gain on Stock 90.00
14 Dividends Paid 80.00
15 Net Income 70.00
16 Initial Investment $50,000.00 B4 60.00
17 Return on Investment 50.00
18 40.00
19 Margin Positions 30.00
20 Margin Based on Ending Price 20.00
21 10.00
22 Price for Margin Call
23 LEGEND:
24 Enter data
25 Value calculated
A B C D E F
1 Chapter 3
2 Short Sales Action or Formula Ending Return on
3 for Column B St Price Investment
4 Initial Investment $50,000.00 Enter data 55.00%
5 Initial Stock Price $100.00 Enter data $170.00
6 Number of Shares Sold Short 1,000 (B4/B9)/B5 160.00
7 Ending Stock Price $70.00 Enter data 150.00
8 Cash Dividends Per Share $2.50 Enter data 140.00
9 Initial Margin Percentage 50.00% Enter data 130.00
10 Maintenance Margin Percentage 30.00% Enter data 120.00
11 110.00
12 Return on Short Sale 100.00
13 Capital Gain on Stock $30,000.00 B6*(B5-B7) 90.00
14 Dividends Paid $2,500.00 B8*B6 80.00
15 Net Income $27,500.00 B13-B14 70.00
16 Initial Investment $50,000.00 B4 60.00
17 Return on Investment 55.00% B15/B16 50.00
18 40.00
19 Margin Positions 30.00
20 Margin Based on Ending Price 110.71% (B4+(B5*B6)-B14-(B6*B7))/(B6*B7) 20.00
21 10.00
22 Price for Margin Call $113.46 (B4+(B5*B6)-B14)/(B6*(1+B10))
23 LEGEND:
24 Enter data
25 Value calculated

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