Mr. P. decides to short sell 10000 shares of Chegg Inc. at that time market price was $5.6. Hisbroker charged $1550 as commission and requested him to deposit 45% margin. During the shortperiod Chegg Inc paid a dividend of $0.25 per share. To close out the position Mr. P buys 10000shares of Chegg Inc. at $4.50 and the broker charged a commission of $1,450. Calculate the returnon the investment of Mr P.

Calculate the amount of investment made by the the investor by multiplying the number of shares…

Answered: Mr. P. decides to short sell 10000…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 63IIP

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A client had the following investment transactions in 20X0: On March 20, purchased 1,000 shares of XYZ Co. ordinary shares at P80.50 plus broker’s fee of P500. Received stock rights permitting the purchase of one share at P60 for every four shares owned on September 1. On this date, the rights had a market price of P3 each, and the market price of the stock ex-right was P72 per share. On Nov. 10, exercised 500 rights from the stock purchased March 20. If stock rights are not accounted for separately, determine the carrying value of the investments if 1/3 of the total holdings was sold for P75 a share. Round off answer to 2-decimal places.

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