Which of the following is incorrect in regard to short selling?
A)Naked short selling involves selling a stock short without first borrowing the stock.
B)During the credit crisis, the SEC temporarily protected more than 800 firms from short selling.
C)The SEC's uptick rule prevents speculators from taking a short position in stocks that have declined at least 30 percent for the day, except when the most recent trade resulted in an increase in the stock price.
D)During the credit crisis, some short-sellers focused particularly on the stocks of financial institutions.
E)None of these are correct.

Question

Which of the following is incorrect in regard to short selling?
A)Naked short selling involves selling a stock short without first borrowing the stock.
B)During the credit crisis, the SEC temporarily protected more than 800 firms from short selling.
C)The SEC's uptick rule prevents speculators from taking a short position in stocks that have declined at least 30 percent for the day, except when the most recent trade resulted in an increase in the stock price.
D)During the credit crisis, some short-sellers focused particularly on the stocks of financial institutions.
E)None of these are correct.

Quizplus · Accepted Answer

The SEC's uptick rule does not specifically prevent speculators from taking a short position in stocks that have declined at least 30 percent for the day. Instead, the uptick rule, when it was in effect, required that the price of the stock be higher than the previous trade price before a short sale could be made, which is not contingent on a stock's daily percentage decline.

Which of the Following Is Incorrect in Regard to Short