Which of the following statements regarding the short interest ratio is true?
A)It is calculated as the 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 calculated as the amount of shares sold short divided by average trading volume.

Question

Quizplus · Accepted Answer

The short interest ratio is calculated as the amount of shares sold short divided by average trading volume. It is used to measure the level of short interest in a particular stock and the number of days it would take for short-sellers to cover their positions based on the average trading volume. Generally, a high short interest ratio indicates that there is a bearish sentiment among investors, while a low short interest ratio suggests a bullish sentiment.

Which of the Following Statements Regarding the Short Interest Ratio