Last year you sold short 400 shares of stock selling at $90.00 per share. Six months later the stock had fallen to $45.00 per share. Over the six-month period, the company paid out two dividends of $1.50 per share. Your total commission cost for selling and buying the shares came to $125. Determine your profit or loss from these transactions.

The net profit from these transactions is $ $ 16.675

Step-by-step explanation:

1. Let's recall that short selling involves the sale of stock that the seller does not own, or shares that the seller has taken on loan from a broker, therefore we sold:

400 * 90 = $ 36,000

2. Then we bought these shares at $ 45 each one, six months later:

400 * 45 = $ 18,000

3. The gross profit is:

36,000 - 18,000 = $ 18,000

4. Dividends paid out:

400 * 1.50 * 2 = $ 1,200

5. Commission cost:

$ 125

6. Net profit:

18,000 - 1,200 -  125 = $ 16.675

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step-by-step explanation: