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3 years ago

You short-sell 200 shares of Tuckerton Trading Co., now selling for $50 per share. What is your maximum possible loss?

Business

1 answer:

Fed [463]3 years ago

3 0

Answer:

The answer is D.

Explanation:

Short selling is a trading strategy that speculates on the fall or decline of a particular security price.

Here, investor borrows a stock from a dealet, sells the stock, and then purchases the stock back to return it to the dealer. Short sellers are hoping that the stock they sell will fall or decline.

The maximum possible loss is unlimited because the price increase (which will be at a disadvantage to the investor might not be known).

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