Question

What is the meaning of “short sell”?

a. Buy shares from a brokerage firm and enter into a forward transaction to sell the shares at today’s price on a future date. b. Buy shares from one brokerage firm and sell the shares to another brokerage firm with a view to make quick money. c. Borrow shares from a brokerage and sell the shares at today’s price with the intention to repay the borrowed stock they sold at some future time when the stock is trading for a lower price. d. Sell the shares at today’s price to an investor and enter into an option agreement to buy the shares back in near future.

Answer 1

Firstly​ we should focus on what short sell is short sell is a position which is held by the investors for the speculation purpose for earning profits by expecting a profit with a decrease in the future value of a stock.

It is a position being create where the speculator sells the shares today by borrowing them at the current price for which he is expecting a decrease in the future to earn profit on the transaction.

On the analysis of all the following conclusion is drawn

Option C is the Correct Answer.

Borrow Shares from a brokerage and sell the shares at today's price with the intention to repay the borrowed stock they sold at some future time.when the stock is trading for a lower price.