Short Selling Flashcards
1
Q
how is short selling more risky than long
A
could lose more than initial investment
in long investments the most you can lose is the initial investmenr
2
Q
what types of funds are not permitted to short sell
A
pensions
mutual funds
3
Q
how does short selling work
A
borrow the share with a prearranged date of return
sell shares and keep proceeds
wait for sticks to fall then buy back at a lower price and return to lender
4
Q
why is short selling good
A
provide information to the market
eg about fraudulent activities
reduces volatility of stock
