Which of the Following Statements Is True Regarding Short Sales

question 46

Multiple Choice

Which of the following statements is true regarding short sales?

• A)An investor can only remain in a short position for 6 months or less.
• B)Short sales can be done on either a cash or margin account.
• C)Short sellers borrow the stock sold short from the exchanges.
• D)Dividends paid during the short sale must be covered by the seller.

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Definitions:

British Pounds

The currency of the United Kingdom, used as a medium of exchange within the country and sometimes beyond.

Put Option

A financial contract that gives the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specific period.

Fair Hedge

A hedge that is accounted for at fair value, with changes in fair value recognized in earnings, to offset the exposure of an identified risk.