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:

Spillovers

Economic events in one context that have effects on a third party or in a different context, often external to the initial economic activity.

Marginal Cost

The additional cost incurred by producing one extra unit of a good or service.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.