Assume That You Open a 100 Share Short Position in Jiffy

question 7

Multiple Choice

Assume that you open a 100 share short position in Jiffy, Inc. common stock at the bid-ask price of $32.00 - $32.50. When you close your position the bid-ask prices are $32.50 - $33.00. If you pay a commission rate of 0.5%, calculate your profit or loss on the short investment?

• A) $32.50 gain
• B) $16.25 loss
• C) $132.50 loss
• D) $100.00 gain

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Definitions:

Fixed Costs

Expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Contribution Margin Ratio

The proportion of sales revenue that remains after variable production costs are deducted, indicating the profitability of specific products.

Monthly Sales

represent the total revenue or units sold within a month.

Products

These are items or services created through a process of production and are offered in the marketplace to satisfy consumer demand.