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2. Suppose you decide to short-sale 500 shares of AAPL stock, which has a bid price of 134.13 and an ask price of 134.31. You
2. Suppose you decide to short-sale 500 shares of AAPL stock, which has a bid price of 134.13 and an ask price of 134.31. You cover the short after 3 months, when the stock has a bid price of 122.87 and an ask price of 123.06.
a. Taking into account only the bid and ask prices (i.e., ignoring commission and interest), what is your profit from this position?
b. Suppose there is a 0.25% commission to sell short, and a 0.25% commission to cover (close) the short sale. What is your profit including these commissions?
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