When you borrow stock from a broker and sell it now with plans to buy it back after it drops in price, you are engaging in a
A)margin call
B)European option
C)American option
D)short sale

Question

Quizplus · Accepted Answer

The activity described is a short sale, where the investor borrows stock to sell it now with the expectation of buying it back at a lower price in the future. A margin call occurs when the value of the investor's account falls below the required level determined by the broker, while European and American options are types of financial derivatives.

When You Borrow Stock from a Broker and Sell It