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QUESTION 41 Which of the following incorrectly describes short selling? a. Short selling profits the investor who create...

QUESTION 41
Which of the following incorrectly describes short selling?
a. Short selling profits the investor who created the position if the price of the asset increases
b. Interest and dividends from the asset borrowed are given to the lender.
c. Short sales happen when investors short assets, or contract, that they do not own.

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Answer #1

41. A

Short selling is a strategy wherein the profits are generated when the price of a stock downfalls and not increases. In case, the price increases, it leads to a loss and not profit. As for, Option (B) and (C), in short selling, any dividends or interest earned, is given to the lender as the stock is not owned by the borrower (which is stated as Option (C)).

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