FINRA SIE Question Answer
Which of the following responses best describes a short sale?
A sale of securities that results in a loss
A sale of securities that the investor does not own
A sale of securities that results in an unsecured debit balance in the investor's account
A sale of securities that the investor had purchased in his cash account but had not yet paid for
Step by Step Explanation:
Short Sale Definition: Involves selling borrowed securities with the expectation of repurchasing them at a lower price.
Investor Ownership: Short sales do not involve securities already owned by the seller.
Other Options: None of the other choices accurately define a short sale.
References:
SEC Regulation SHO (Short Selling): SEC Short Sales.
TESTED 09 Jul 2025
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