Question

A stockbroker trades shares she does not own with an obligation of later repayment, and in the hope that the price of traded shares will fall. She then repays share debt with shares purchased at a lower price and pockets the spread between initial share price and repayment price. This attempt to profit from a falling stock price is known as ___________.

Answer 1

short selling

Explanation:

Short-selling is a process when a shareholder buys shares and sold them instantly and expecting that he or she will be able to have them at cheaper price later on .After then seller transfer them to lender from where he/she borrow the stock and after keep the difference as a income.

Short selling is a simple idea in which a shareholder borrow a stock, sells the stock to other person, then again buys that stock to give it back to a lender. Short sellers believe that the stock they have sell is going to fall in value