CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

If Frank shorted $20,000 worth of Microsoft stock and the stock fell 50%, Frank has ______

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 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.
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