Chapter 11 Financial Planning Exercise 8 Calculating short position cash flows and returns

Assume that an investor short-sells 700 shares of stock at a price of $45 a share, making a 50% margin deposit. A year later, she repurchases the borrowed shares at $50 a share. A minus sign should precede negative answers, if any.

1. How much of her own money did the short-seller have to put up to make this transaction? $
2. How much money did the investor make, or lose, on this transaction? Ignore margin interest. $
3. What rate of return did she make on her invested capital (see part a)? Ignore margin interest. Round the answer to two decimal places. %