The collateral an investor must put up when conducting a short sale is known as a margin requirement.

Question

Quizplus · Accepted Answer

This is correct. When an investor conducts a short sale, they must borrow shares from a broker and sell them in the market, with the expectation of buying them back at a lower price to make a profit. However, since the shares are borrowed, the broker requires the investor to put up collateral in the form of a margin requirement to ensure that they can cover any potential losses.

The Collateral an Investor Must Put Up When Conducting a Short