Question

Question 7 "Selling short" involves borrowing shares of stock and then: Saying flattering things in public...

Question 7

"Selling short" involves borrowing shares of stock and then:

Saying flattering things in public about a stock
Returning them within 24 hours
Borrowing the money to buy them
Trading the stock for short-term bonds

Selling them in anticipation of a price drop

Question 8

In contrast to issuing a bond, the great advantage of issuing stock from the point of view of a company is that:

Money raised from the stock sales does not have to be repaid
Dividends are more attractive to investors than interest payments
Stock sales are less heavily regulated than bond sales
It takes less time to raise money with stock than with bonds

It can be sold directly to investors without paying an underwriter

Question 9

The Dow Jones Industrial Average is based on the performance of how many stocks:

12
30
100
500
3000

Homework Answers

Answer #1

Question 4. Option 4.

Trading the stock for short-term bonds

Explanation: In short-selling an investor borrows stocks with an anticipation of a future decline in the price of the stock. Then the investors sell the stocks immediately at the current market price. Now, when the stock price declines after some time, the investor buys the stocks again and returns the stocks to the lender. The difference between the selling price and the buying price is the profit of the investor selling short.

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