After hours of research and analysis, you decide that Whittier Plastics is a failing company. The stock is currently trading at $50 per share, but you are confident that the share price will decrease quickly by the end of the month.

In order to capitalize on the predicted decline, you decide to short sell shares of Whittier Plastics. Since you have an existing margin account with Morgan Stanley, you contact your broker and put in an order to short 400 shares. The broker borrows the shares from the margin account of one of the firms clients. The broker sells the shares in the open market and the proceeds of the sales are put in your margin account.

In the coming months, one of two things can happen:

Assume the share price of Whittier Plastics drops to $30. Complete the following table.

Borrowed 400 shares of Whittier Plastics at $50/share = _______________

Bought back 400 shares of Whittier Plastics at $30/share = _______________

Your Profit/Loss = _______________

Assume the share price of Whittier Plastics rises to $100. Complete the following table.

Borrowed 400 shares of Whittier Plastics at $50/share = _______________

Bought back 400 shares of Whittier Plastics at $100/share = _______________

Your Profit/Loss = _______________