Jordan short sells 500 shares of Facebook at $200.Her broker has a 50% margin requirement.Facebook does not pay a dividend and commissions and other charges total $50.Shares of Facebook drop to $175 and she covers.What is her profit/loss?

Question

Quizplus · Accepted Answer

Jordan's profit from the short sale is calculated as follows: She initially sells 500 shares at $200 each, totaling $100,000. She then covers (buys back) the shares at $175 each, totaling $87,500. The difference between her sell and buy prices is her gross profit: $100,000 - $87,500 = $12,500. After subtracting commissions and other charges of $50, her net profit is $12,500 - $50 = $12,450.

Jordan Short Sells 500 Shares of Facebook at $200