One Way for an Investor to Protect Themselves When Selling

question 19

Multiple Choice

One way for an investor to protect themselves when selling stock short is to

• A) not make the sale on margin.
• B) buy an offsetting amount of the same shares coincident with the short sale to perfectly hedge the transaction.
• C) issue a stop buy limit order at a price somewhere above the short sale price.
• D) An investor cannot protect against large losses in a short sale transaction.

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Definitions:

Effective Strategy

A plan or course of action designed to achieve a specific goal or outcome with efficiency and success.

Personality Clashes

Conflicts that occur due to differing or incompatible personality traits among individuals.

Human Relations

The study and management of how people interact within groups, often in a professional setting.

Proactive Measures

Actions taken in advance to prevent potential problems or to seize opportunities before they become obvious.