Explain a short position and long position.How do they affect portfolio weights?

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Quizplus · Accepted Answer

The Answer is In many markets investors can sell short certain securities,which means that they can sell investments that they do not currently own.To sell short shares or bonds,the investor must borrow the securities from someone who owns them.This is known as taking a short position in a security.To close out the short position,the investor buys the investment back and returns it to the original owner.In contrast,a long position,achieved by buying an investment,has a positive portfolio weight.To compute portfolio weights when some investments are sold short,sum the amount invested in each asset of the portfolio,treating shorted (or borrowed)investments as negative numbers.

Explain a Short Position and Long Position