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If an Investor Feels the Price of a Stock Will

question 4

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If an investor feels the price of a stock will decline in the future, which trade should the investor undertake?


Definitions:

Profit

The financial gain achieved when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Positive-Sum Game

A situation in economics or game theory where all participants can gain or benefit in some way; opposite of a zero-sum game.

Zero-Sum Game

A game theory concept where one participant's gain or loss is exactly balanced by the losses or gains of the other participant(s).

Negative-Sum Game

A situation in which the total losses incurred by the participants are greater than the total gains.

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