Which of the Following Are Characteristics of Short Selling

question 67

Multiple Choice

Which of the following are characteristics of short selling?
I. borrowing shares of stock from a brokerage firm or other investors
II. selling shares of stock you do not own
III. betting the stock price will increase
IV. limiting losses per share to the price at which the stock was sold

• A) I and II only
• B) III and IV only
• C) I, II and IV only
• D) I, II, III only

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Definitions:

Conversion Premium

The additional amount over the current value that an investor pays to convert a convertible security into a specified number of shares of common stock.

Conversion Ratio

The specific quantity of common shares an investor can receive for converting each unit of a convertible security, such as a convertible bond or preferred stock.

Par Value

The face value of a bond or stock, typically the amount that is paid back at maturity for bonds or a nominal dollar value assigned to shares of stock.

Coupon Bond

A type of bond that offers interest payments to the holder at specified intervals until the bond's maturity.