Assume that an investor short sells 500 shares of stock at a price of $75 a share, making a 50 percent margin deposit. A year later, she repurchases the borrowed shares at $55 a share.
a. How much of her own money did the short-seller have to put up to make this transaction?
b. How much money did the investor make, or lose, on this transaction?
c. What rate of return did she make on her invested capital (see part a)?