Short Selling

1. A short-sell is when an investor predicts that the price of an asset will go...

Up?

Down?

2. Short-selling can be thought of as the opposite of going long or buying shares

True

False

3. When a fund manager short-sells a stock he must return the same amount of shares to the lender when closing the position regardless of the share price?

True

False

4. A fund manager short sells shares of Google at $300. He then closes out this position by placing a buy to cover trade at $250. Does he make a profit or loss on this trade?

Profit

Loss

Breaks even

5. When a short-seller trades with a lender they will require the short-seller to deposit a margin

True

False

6. Why would a fund manager short-sell?

Speculation

Hedging

Both