Answer to Question #6202 in Finance for ro

Question

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.

Answer 1

percentage return on the position = (55 - 45 + 2)/55*100% = 12/55*100% = 21.8%