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Gains will result from a short sale if        a. stock prices rise        b. stock...

Gains will result from a short sale if

       a. stock prices rise

       b. stock prices fall

       c. stock prices remain stable

       d. The answer is indeterminate.

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Homework Answers

Answer #1

Whenever a person takes a long position, he or she gains when the stock prices goes up and incurs loss if the stock price goes down. However if a person takes a short position, he or she gains when the stock prices falls and incurs loss if the stock price went up.

In the given case, the person has taken a short position and the gain will arise if the stock prices fall

So, the correct answer is option b.

Feel free to ask in case of any query relating to this question

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