Data:

Last year Anne sold short (this is another term for short selling) four hundred shares of stock at $90 per share. Six months later the stock fell to $45 per share. Over the six-month period, the company paid out two dividends of $1.50 per share. Her total commission cost for buying and selling the shares came to $125.

Calculations:

a. Determine Anne’s profit or loss from this transaction.

b. What would her profit or loss have been if the stock had rallied to $250 per share?