When purchasing stock short,you must put up some collateral.

Question

Quizplus · Accepted Answer

When purchasing stock short, the investor borrows shares from a broker or other investor and sells them on the market, hoping to buy them back at a lower price and return them to the lender. However, the investor must put up collateral (such as cash, securities, or a line of credit) in case the stock's price goes up instead of down, resulting in potential losses for the lender.

When Purchasing Stock Short,you Must Put Up Some Collateral