The Arbitrage Pricing Theory (APT) assumes investors can sell short.

Short selling is a trading strategy where an investor sells borrowed securities, expecting the price to decline, and then repurchases them at a lower price.

Why is Option B Correct?

Short sellers borrow shares, sell them at the current price, and later buy them back at a lower price to return to the lender, profiting from the price difference.

APT assumes investors can sell short to exploit mispricings in multiple risk factors.

Why Not Other Options?

A (Not selling the whole shareholding) → Short selling does not involve owning shares.

C (Selling & buying back shortly after) → Describes day trading, not short selling.

D (Selling many securities quickly) → Short selling is not about trading speed, but betting on price declines.

???? Reference: CFA Institute (Arbitrage Pricing Theory), CISI Wealth & Investment Management.