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An investor shorts 100 shares when the share price is $50 and closes out the position six months later when the share price is $43. the shares pay a dividend of $3 per share during the six months. how much does the investor gain?

Respuesta :

100 x 50 = $500 per share

after 6 months:

100 x 43 = $430 per share

PLUS dividends (3 x 100 = $300) makes $730

investor gains $230 (ending balance - original balance)

The amount received to an investor in respect of a profit on a short sale is $230.

What is short selling?

Short selling is a practice where the shares are sold at first and then acquires back from the market after a certain period.

Given values:

The amount received before 6 months : $500 (100 shares X $50)

Amount earned after 6 months: $730 (100 shares X $43 + 100 shares X $3)

Computation of gain to an investor on short-selling:

[tex]\rm\ Gain \rm\ to \rm\ Investor=\rm\ Amount \rm\ received \rm\ after \rm\ six \rm\ months-\rm\ Amount \rm\ received \rm\ before \rm\ six \rm\ months\\\rm\ Gain \rm\ to \rm\ Investor=\$730-\$500\\\rm\ Gain \rm\ to \rm\ Investor=\$230[/tex]

Therefore, the short sale done by an investor gives him a profit of $230.

Learn more about the short-selling in the related link:

https://brainly.com/question/14981363

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