A short seller
A)anticipates that the price of the stock sold short will increase.
B)earns the difference between what they initially paid for the stock versus what they later sell the stock for.
C)makes a profit equal to the difference between the original sell price and the price paid for the stock, after subtracting any dividend payments made.
D)is essentially lending the stock to another investor and will ultimately receive that stock back from that investor.
E)none of the above

Question

Quizplus · Accepted Answer

A short seller anticipates that the price of the stock sold short will decrease. They sell borrowed shares of a stock that they believe will decrease in value, and later buy back the same number of shares at a lower price. The profit is equal to the difference between the original sell price and the price paid for the stock, after subtracting any dividend payments made.

A Short Seller