Which of the following statements regarding the short interest ratio is true?
A) It is derived as total shares sold short divided by total shares outstanding.
B) It indicates the dollar amount needed to cover all short positions.
C) The higher the ratio, the more bullish investors are.
D) It is derived as number of shares sold short divided by average trading volume.

Question

Quizplus · Accepted Answer

The short interest ratio is calculated by dividing the number of shares sold short by the average daily trading volume. This ratio indicates how many days it would take for short sellers to cover their positions based on the average trading volume.

Which of the Following Statements Regarding the Short Interest Ratio