Which of the Following Is Correct Concerning Short Sales of Stock

question 79

Multiple Choice

Which of the following is correct concerning short sales of stock at the time the short sale is made?

• A)The taxpayer does not deliver to the purchaser the shares sold short.
• B)The taxpayer delivers to the purchaser the shares sold short.
• C)The taxpayer may already own the shares sold short.
• D)The taxpayer always already owns the shares sold short.
• E)None of these.

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Definitions:

Profits

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Total Profit

Total profit is the financial gain a business achieves after subtracting total costs from total revenue.

AVC

Average Variable Cost, which is the cost a company incurs to produce each additional unit of product, excluding fixed costs.

ATC

Average Total Cost, which is the total cost of production divided by the quantity of output produced.