Feedback for Bafta is speculator planning to short Mac Ltd stocks currently trading at $50 as he thinks the stock price might fall in next 10 days. To execute the short sell Bafta borrowed 200 stocks of Mac Ltd from Iffa who bought 300 these stocks just a day before at $48 and (Bafta) sold it in the spot. After two days company issued dividend worth $2. On the 10th day, price increased to $60 and Iffa asked to Bafta to return stocks so that he can sell and earn a profit. Stocks were returned by the Bafta at the same time. Iffa waited for two days and sold these stocks at $62. Calculate the profit or loss to Bafta and Iffa.

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Location: Quiz B4C14 Binomial Trees

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