The short-interest ratio is the shares sold short divided by the
A)average shares purchased over a recent period.
B)average daily trading volume over a recent period.
C)interest rate paid on the short sale.
D)average daily trading volume on other stocks from the same industry.
E)none of the above

Question

Quizplus · Accepted Answer

The short-interest ratio is calculated by dividing the shares sold short by the average daily trading volume over a recent period. This ratio is useful for determining how many days it would take for short sellers to cover their positions, which can indicate the level of bearish sentiment surrounding a stock. Option A is incorrect because the average shares purchased is not relevant to calculating the short-interest ratio. Option C is incorrect because the interest rate paid on the short sale is not part of the calculation. Option D is incorrect because the average daily trading volume on other stocks from the same industry is not relevant to this specific calculation. Option E is incorrect because there is a relevant answer choice.

The Short-Interest Ratio Is the Shares Sold Short Divided by the