How is interest on shorted shares calculated?

Question

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.

Bob Baerker · Answer

The formula is:

(Borrow rate) x (market value of the security)/365

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.

How is interest on shorted shares calculated?

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