Question

An order ticket to sell 100 shares of ABC short means that the seller will: A deliver shares that are owned on settlement date B deliver shares that are borrowed on settlement date C not deliver shares on settlement date, but will deliver a due bill instead D not deliver shares on settlement date, but will deliver the shares on a future date

Answer 1

Answer:

The answer to this question is B: Delivers shares that are borrowed on settlement date

Explanation:

As long as it is a short sale, it simply means it is the sales of borrowed shares. Selling 100 shares of ABC shorts simply implies that at some point, there was speculation of a possible drop in the prices of security, and thus the shares was borrowed from a broker to sell. The intention is to buyback the stock and return to the lender when the price drops.

Answer 2

Answer: Option B- Deliver shares that are borrowed on settlement day.

Explanation:

Selling 100 shares of ABC shorts is a short sale or short-selling. It is a situation when an investor borrows shares and sell them immediately hoping the price to fall so he can collect the difference and return back the share to the lender.