Trading & MarketsQuestion 99 of 125
When an investor sells stock short, the shares delivered to the buyer are:
a.Newly issued by the company
b.Owned outright by the short seller
c.Borrowed, typically through the broker-dealer
d.Created by the exchange
Explanation
A short sale involves selling securities the investor does not own by borrowing them, usually through the broker-dealer's securities lending arrangements. The short seller must later buy shares to return the borrowed stock (cover), and is responsible for any dividends paid while the position is open.
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