Jennifer Expects the Price of a Share to Decrease Over

question 10

Multiple Choice

Jennifer expects the price of a share to decrease over the next month. Which one of the following strategies would allow Jennifer to earn a profit if the expected decrease actually occurs?

• A) Take a long position in the share today.
• B) Buy the share on margin today.
• C) Take a long position in the share one month from today.
• D) Sell the stock share today.

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Definitions:

Sales On Account

Transactions where revenue is recorded when a sale is made but the cash is collected at a later date.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by dividing current assets by current liabilities.

Financial Data

Information related to financial transactions, performance, and status of an entity.

Working Capital

The gap between a business's present assets and liabilities, signifying its short-term financial stability and operational functionality.