Question

With reference to stock markets, pick the correct answer about “short selling”:  

a. Shorting is a sure way of profiting from a suspected bubble.

b. Shorting involves selling shares that you currently own.

c. The maximum loss a trader can incur by shorting is the price he receives from the sale of the shares.

d. Shorting is used to benefit from a price fall.

Answer 1

The answer is option D.
Short selling is used to benefit from the price fall.
Short selling in stock market trading is a strategy where the investor sells the shares or stocks that he does not own currently or at the time of selling (This is a special facility for investors in stock markets, where they can sell the shares of any company although they do not own them). The investor sells the shares expecting that the price of those shares will decrease in future with which he can make profit by buying back those shares at lower price. The profit of the investor is the difference between the price of the sahres at the time of short selling and the price of the shares at the time of buying back.