Personal Finance & Money Asked by Kaguya Ōtsutsuki on September 3, 2020
Is the formula below correct?
[Shares shorted * price sold] * [annual interest rate / 360 * # of days borrowed] = interest charged
Based on the formula, it doesn’t seem like interest is compounded.
The formula is:
It's a borrow fee rather than interest. The borrow rate and the price of the security can fluctuate daily. It is charged for holding a short position overnight and is calculated daily. Typically, it accrues and is debited monthly.
Answered by Bob Baerker on September 3, 2020
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