Mr. Smith bought 600 shares of common stock of ABC Ltd. at $80 a share...
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Finance
Mr. Smith bought 600 shares of common stock of ABC Ltd. at $80 a share a few years ago. Currently, price per share of ABC's stock is $110. Suppose he takes a short position of 400 shares at the current price of $110. For the following possible spot price on the settlement date, denoted by S1, calculate capital gain(loss) for his total position in ABC's stock:
(i) St = $50 (ii) St = $180
Does his short position of 400 shares provide a perfect or a partial edge? Explain by using the statistical measure, called the range.
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