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Solve correctly Robin is holding 1000 shares of face value of ' 100 each of M/s. ABC Ltd. Ho wants to hold these shares for
Solve correctly
Robin is holding 1000 shares of face value of ' 100 each of M/s. ABC Ltd. Ho wants to hold these shares for long term and have no intention to sell. On 15 January 2020, M/s XYZ Ltd. has made short sales of M/s. ABC Ltd.'s shares and approached Robin to lend his shares under Stock Lending Scheme with following terms: (i) Shares to be borrowed for 3 months from 01-01-2020 to 31-03-2020, (ii) Lending Charges/Fees of 1% to be paid every month on the closing price of the stock quoted in Stock Exchange and (iii) Bank Guarantee will be provided as collateral for the value as on 01-01-2020. Other Information: (a) Cost of Bank Guarantee is 8% per annum, (b) On 29-02-2020 M/s ABC Ltd.'s share quoted in Stock Exchange on various dates are as follows: You are required to find out: (i) Earning of Robin through Stock Lending Scheme in both the scenarios, (ii) Total Earnings of Robin during 01-01-2020 to 31-03-2020 in both the scenarios, (iii) What is the Profit or loss to M/s. XYZ by shorting the shares using through Stock Lending Scheme in both the scenariosStep by Step Solution
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