Aria has heard a rumor that a major food company will be forced to recall millions of jars of peanut butter.due to contamination If the rumors are true, the company's stock price will decline sharply.Which one of the following strategies would allow Jennifer to earn a profit if the rumor proves to be true?

Question

Quizplus · Accepted Answer

Selling the stock short today would allow Jennifer to earn a profit if the rumors are true and the stock price does decline sharply. Taking a long position or buying on margin could result in losses if the stock price declines. Waiting one month to take a long position would be risky as the decline in stock price may already have occurred.

Aria Has Heard a Rumor That a Major Food Company