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Answer to Question #6202 in Finance for ro

Question #6202

A speculator sells a stock short for $55 a share. The company pays a $2 annual cash dividend. After a year has passed, the seller covers the short position at $45. What is the percentage return on the position (excluding the impact of any interest expense and commissions)? Round your answer to one decimal places.
Expert's answer
percentage return on the position = (55 - 45 + 2)/55*100% = 12/55*100% = 21.8%

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