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A stock is trading in the market at $455. An investor borrows 191 shares and sells them into the market. Interest rates are 3.71% and
A stock is trading in the market at $455. An investor borrows 191 shares and sells them into the market. Interest rates are 3.71% and the borrow cost is 0.74%. Both are quoted as continuously compounded. The investor waits 17 days and buys back the shares at $305. Ignoring the fluctuating collateral position how much money did he make in total on the transaction? You need to compute both the profits/losses on the shares as well as the interest on the collateral. Round your answer to two decimal places.
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