SIE: 8.3.5. Short Selling In A Margin Account

Taken from our SIE Online Guide

8.3.5. Short Selling in a Margin Account

Short selling is when an investor sells securities that he doesn’t actually own—he sells borrowed securities. Investors sell short if they believe that the price of a stock will decline. Based on this belief, they sell borrowed stock at a market price and then, in the future, buy back the borrowed shares at a, hopefully, lower price, pocketing the difference.

Thus, when the sell transa

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