Explanation:
The computations are shown below:
a. Proceeds from the short sale (net of commission)
= Number of shares Ă— (Market selling price per share - commission per share)
= 100 Ă— ($25 - $0.10)
= $2,490
b. The dividend payment is
= Number of shares Ă— dividend paid per share
= 100 shares Ă— $2.50
= $250
c. Total cost including commission is
= Number of shares Ă— (Market purchase price per share + commission per share)
= 100 Ă— ($16.20 + $0.10)
= $1,630
d. The net gain from your transaction is
= $2,490 - $1,630
= $860