Business, 05.03.2022 14:00 wmaingrette1

Company A and Company B are both banks offering similar services and their stocks are historically very positively correlated. A hedge fund manager decides to take a short position on Company A for $5 million and a long position on Company B for $5 million. Use the information below to determine how much profit the manager will make from the trade, assuming it was initiated and closed in 150 days. Initiated Position Closed position Annual Stock Lending Fee
Company A $2.50 $2.32 15bps
Company B $2.00 $21.5

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