On January 1, you sold short one round lot (that is, 100 shares) of Lowe\'s stoc
ID: 2383566 • Letter: O
Question
On January 1, you sold short one round lot (that is, 100 shares) of Lowe's stock at $26.30 per share. On March 1, a dividend of $3.10 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $21.20 per share and returned your borrowed shares. You paid 35 cents per share in commissions for each transaction.
What is the total cost, including commission, if you have to cover the short sale by buying the stock at a price of $21.20 per share?
On January 1, you sold short one round lot (that is, 100 shares) of Lowe's stock at $26.30 per share. On March 1, a dividend of $3.10 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $21.20 per share and returned your borrowed shares. You paid 35 cents per share in commissions for each transaction.
Explanation / Answer
$ per share No. of Shares Amount($) Amount for short of Lowe's stock A 26.3 100 2630 Less: Amount of dividend paid B 3.1 100 310 2320 Less: Amount of buying the stock to cover the short C 21.2 100 2120 Less: Commission Paid D 0.35 100 35 Proceeds from short sale 165 Dividend Payment (B) 310 Total Cost (C+D) 2155 Value of Account 200