Suppose that an investor expects that the price her security will decline. She can still benefit should the price actually decline if she can arrange to sell the security without owning it.

Question

Quizplus · Accepted Answer

This is known as short selling, where an investor borrows the security, sells it at the current price, waits for the price to decline, buys it back at a lower price, returns the security to the lender and keeps the profit.

Suppose That an Investor Expects That the Price Her Security