short seller anticipates the stock price will __________, so that the share can be purchased later at a __________ price than it initially sold for. A. fall, higher B. fall, lower C. rise, higher D. rise,
short seller anticipates the stock price will __________, so that the share can be purchased later at a __________ price than it initially sold for. A. fall, higher B. fall, lower C. rise, higher D. rise,
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
The short seller anticipates the stock price will __________, so that the share can be purchased later at a __________ price than it initially sold for.
A.
fall, higher
B.
fall, lower
C.
rise, higher
D.
rise, lower
Expert Solution
Step 1
In case of short selling, shares are short sold with the anticipation of share price falling and then shares are brought at a price lower than selling price to make profit
Ex: if Mr.A has short sold shares at $ 100, to make profit he should buy shares at a price lower than $100
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