Assume You Sell Short 100 Shares of Common Stock at $45

question 18

Multiple Choice

Assume you sell short 100 shares of common stock at $45 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $40 per share? The stock paid no dividends during the period, and you did not remove any money from the account before making the offsetting transaction.

• A) 20.03%
• B) 25.67%
• C) 22.22%
• D) 77.46%