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Posted on Jul 22, 2024

Mr. Gilbert believing that the price of Caterpillar which is $ 160 today will go down significantly decides to short sell 200 shares of Caterpillar

Mr. Gilbert believing that the price of Caterpillar which is $ 160 today will go down significantly decides to short sell 200 shares of Caterpillar by borrowing them from his brokerage house

A) How much collateral must be shown by Mr.Gilbert for his short sale operation?

B) What will be the net profit of Mr. Gilbert if Caterpillar goes down to $140 after two months and if the annual interest rate in US for short sale operations is 4.8%?

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