3. You client wants to sell 1,000 shares of ABC stock short. Your firm will lend him the shares at a cost of 12% per year. Commissions on trades are 1% of the price of the stock. Your client sells these shares at $100 per share.

a. If the stock price goes to $80 a share in two months and your client covers his short position at that time, what is the clients gain or loss?

b. If the stock price goes to $120 a share in two months and your client covers his short position at that time to minimize the risk of the price going higher, what is the clients gain or loss? 4. Your client wants