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BU111 Spring 2012 - Supplementary Questions

# B what was the total return from your broker when you

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Unformatted text preview: tions Problem 1 a) What was the total cost of the 1,000 shares? b) What was the total return from your broker when you sold the shares? c) What is your capital loss and yield from the transaction? Problem 2 a) What was the total cost of the 750 shares? Purchase of 500 Shares: Purchase of 250 Shares: Total Cost of 750 Shares b) What was the total return received from the broker? c) Calculate the capital gain and yield on the investment. ( ) Raising Marks. Raising Money. Raising Roofs. www.schoolsos.com Students Offering Support: Wilfrid Laurier University Problem 3 a) Calculate the proceeds from the short sale and sale commission. b) How much will you have to additionally deposit in the short account? c) What is your capital gain and yield? d) Explain the concept of leverage, and how it relates to selling short. Leverage is the use of borrowed funds in order to increase the return on an investment. In selling short, the shares are borrowed from the broker and sold on the open market. The investor only has to put in an amount equal t...
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