The maximum loss you can incur on a short sale is:
A)limited to your initial equity.
B)limited to your initial margin.
C)limited to the margin loan plus interest.
D)zero.
E)unlimited.

Question

Quizplus · Accepted Answer

The maximum loss on a short sale is unlimited as there is no ceiling on the potential increase in the price of the asset being shorted. Therefore, the loss could exceed the initial equity, initial margin, or margin loan plus interest.

The Maximum Loss You Can Incur on a Short Sale