CFA Practice Question
If Frank shorted $20,000 worth of Microsoft stock and the stock fell 50%, Frank has ______
B. made $10,000.
C. lost $10,000.
D. made $5,000 and eliminated margin requirements.
A. covered his short position.
B. made $10,000.
C. lost $10,000.
D. made $5,000 and eliminated margin requirements.
Correct Answer: B
User Contributed Comments 8
| User | Comment |
|---|---|
| cptp | can anyone explain how? |
| sirikaru | you are selling short Microsoft stock for $20000. Stock fell 50% which means you are buying the same stock for $10000 and covering your short sale.you made a profit of $10000.($20000 - $10000). |
| IvanTG | Unrealized profit until purchased of course... |
| jpducros | 10.000 usd profit minus the loan cost on margin. |
| yesandy11 | He bought at $10,000 and sold at $20,000 (just in reverse). $10,000 in profit. |
| LordRommel | oh my god! my head is spinning |
| thekobe | he borrowed 20000 stocks with a value of $1 each one, the price fell to $0.50 and he replaces the 20000 stocks at the current price, so he made $10,000 |
| moneyguy | Thank you, thekobe. |