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Frank sells 500 shares short when the price is $10 per share. The shares are repurchased and delivered a year later, when the price is
Frank sells 500 shares short when the price is $10 per share. The shares are repurchased and delivered a year later, when the price is $1.50 per share. Frank is required to deposit 120% of the proceeds from the short sale in an account earning 1% per year effective. Frank can borrow at the risk free rate of 3% per year effective. There are no dividends. What is Frank's gain on this transaction
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