What Phrase Might Be Used to Describe the Initial Transaction

question 15

Multiple Choice

What phrase might be used to describe the initial transaction a short seller initiates when shorting an equity security?

• A) Buy
• B) Sell
• C) Borrow
• D) Covering

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Definitions:

Opportunity Costs

The forfeiture of possible benefits from other options when selecting a specific choice.

Financial Investment

The purchase of a financial asset (such as a stock, bond, or mutual fund) or real asset (such as a house, land, or factories) or the building of such assets in the expectation of financial gain.

Certificate of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate, often issued by banks.

Opportunity Costs

The value of the best alternative that must be foregone as a result of choosing a particular option.