This Morning,you Shorted 100 Shares of Better Foods Stock at a Price

question 37

Essay

This morning,you shorted 100 shares of Better Foods stock at a price per share of $46.What is the maximum potential profit and maximum potential loss on this position?
Explain how you compute these values.Ignore trading costs,taxes,and dividends.

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Definitions:

Shares

Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities; also known as shareholder's equity.

Cash Dividend

A distribution of a company's earnings to its shareholders as actual cash.

Assets

Resources owned or controlled by a person or business, which are expected to produce economic value or benefit in the future.