Question

Elmo​ Inc.'s stock is currently selling at $ 60.68 per share. For each of the following situations​ (ignoring brokerage​ commissions), calculate the gain or loss that Courtney Schinke realizes if she makes a 100​-share transaction.​ (Enter all losses as negative​ numbers.) a. She sells short and repurchases the borrowed shares at $ 68.44 per share. b. She takes a long position and sells the stock at $ 78.72 per share. c. She sells short and repurchases the borrowed shares at $ 43.16 per share. d. She takes a long position and sells the stock at $ 60.68 per share.

Answer 1

a. -$776 loss

b. $1,804 gain

c. $1,752 gain

d. No loss no gain

Step-by-step explanation:

The computation of the gain or loss in each case is shown below:

a.First case

Sale value of shares = 100 shares × $60.68

= $6,068

Purchase value of shares = 100 shares × $68.44

= $6,844

So, the loss would be

= $6,068 - $6,844

= -$776 loss

b. Second case

Purchase value of shares = 100 shares × $60.68

= $6,068

Sale value of shares = 100 shares × $78.72

= $7,872

So, the gain would be

= $7,872 - $6,068

= $1,804 gain

c. Third case

Sale value of shares = 100 shares × $60.68

= $6,068

Purchase value of shares = 100 shares × $43.16

= $4,316

So, the gain would be

= $6,068 - $4,316

= $1,752 gain

d. Fourth case

Sale value of shares = 100 shares × $60.68

= $6,068

Purchase value of shares = 100 shares × $60.68

= $6,068

So, there is no loss no gain