Question

Glenn's Discount Hedge Fund is using a long/short strategy to try to profit from expected changes in the economy. Today the fund shorts 100 shares of Carnival Cruise Lines at $20 per share. The fund takes the proceeds from the short sale and adds another $19,000 to purchase shares of Charmin for $32 per share. One year later, the company closes out this investment when Charmin sells for $52 per share and Carnival Cruise Lines sells for $18 per share. What is the rate of return on this investment? Answer in decimals (not percent) and include 4 decimals in your answer, for example 0.1234.

Answer 1