Assume That the Price of ABC Common Stock Fell in a Short

question 41

Multiple Choice

Assume that the price of ABC common stock fell in a short period of time from $105 to $84.Which of the following investors probably made the most money?

• A)Abe took a long position in 1,000 shares of ABC.
• B)Bert took a short position in 1,000 shares of ABC.
• C)Carrie kept her money in CDs at the bank.
• D)Darren shorted 2,000 shares of ABC using a margin loan.
• E)Earl used a margin loan to finance a 2000-share long position in ABC.

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Definitions:

Management Theory

A collection of ideas and principles that provide a framework for effective management and organization of businesses and other enterprises.

Unity of Command

A principle in management and military strategy that stipulates each individual should report to only one manager to avoid confusion and conflict.

Henri Fayol

A French engineer and management theorist who is best known for developing a general theory of business administration and establishing the 14 principles of management.

Information Overload

A situation where an individual or system is overwhelmed by the amount of information to process, hindering decision-making or understanding.