Which of the Following Statements Is Incorrect

question 35

Multiple Choice

Which of the following statements is incorrect?

• A) In a short sale, investors place an order to sell a stock that they do not own.
• B) Investors sell a stock short when they anticipate that its price will rise.
• C) When investors sell short, they will ultimately have to provide the stock back to the investor from whom they borrowed it.
• D) Short-sellers must make payments to the investor from whom the stock was borrowed to cover the dividend payments that the investor would have received of the stock had not been borrowed.

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Definitions:

Commodity Futures Pricing

The process of determining the price at which commodity futures contracts are traded in the market.

Spot Prices

The current price in the marketplace at which a given asset, such as securities, commodities, or currencies, can be bought or sold for immediate delivery.

Cost of Carry

The cost associated with holding a financial position, including storage costs for commodities or interest costs for financial securities.

S&P 500 Index

An index comprising 500 of the largest companies listed on stock exchanges in the United States, serving as a barometer for the overall market's health.