Canadian Securities Course (CSC) Practice Exam · Question
An investor wants to profit from an anticipated decline in the price of a stock. Which trading strategy would be most appropriate for this objective?
Short selling involves borrowing shares and selling them, hoping to buy them back later at a lower price to return to the lender, thus profiting from a price de
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Question: An investor wants to profit from an anticipated decline in the price of a stock. Which trading strategy would be most appropriate for this objective?
Answer options:
- Buying common shares.
- Buying preferred shares. ✅ Engaging in a short sale.
- Exercising a warrant.
Correct answer: Engaging in a short sale.
Explanation: Short selling involves borrowing shares and selling them, hoping to buy them back later at a lower price to return to the lender, thus profiting from a price decline.
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