Capitalization Accounting
Short Selling question?
ok so your a fairly wealthy individual and you own 500,000 shares of a small cap company with a market capitalization of 1 billon dollars. each share is $15 you sell all 200,000 shares because you think the compnay has a crapy management blah blah blah. You tell another investor that you will be selling 200,000 shares. He short sells 500,000 but for giving him that information you ask him to cut you in on 10%. do you make money?
another question say you know what day a company pays its dividends out right? you short sell on the day it pay its dividends out, in accounting dividends decrease stock holders equity. so wouldn’t the stock price go down? or is this taken into account when figuring out the price of a stock?
i meant to say 500,000 not 200,000
1. It depends on other things like:
a. What price did you purchase the 500,000 shares for?
b. So your investor friend shorted 500,000 – he still has to buy them back. What will happen to the stock price when he covers?
2. The opening price of a stock on the ex-dividend date is adjusted down for the dividend.
Business Calculations & Accounting : How to Calculate a Capitalization Rate
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