What is the meaning of "short sell"?
A)Buy shares from a brokerage firm and enter into a forward transaction to sell the shares at today's price on a future date.
B)Sell the shares at today's price to an investor and enter into an option agreement to buy the shares back in near future.
C)Buy shares from one brokerage firm and sell the shares to another brokerage firm with a view to make quick money.
D)Borrow shares from a brokerage and sell the shares at today's price with the intention to repay the borrowed stock they sold at some future time when the stock is trading for a lower price.

Question

Quizplus · Accepted Answer

Short selling involves borrowing shares from a brokerage and selling them at today's price with the intention of repaying the borrowed stock they sold at a future time when the stock is trading for a lower price. Option agreements and forward transactions are not involved in short selling. Choice A describes a forward transaction, choice B describes an option agreement, and choice C describes arbitrage.

What Is the Meaning of "Short Sell