short selling
Identify the risk, unique to short selling, that Teri accepts when she chooses to sell short.
A. Need to maintain adequate margin.
B. Use of margin magnifies risk and return.
C. Need to meet new margin calls.
D. Unlimited loss.
老师您好， 这题考的是short selling的risk么？ 正确答案是D， 为什么A不对呢
A选项的解释是这样子的：That’s incorrect.
Teri must maintain adequate margin in the short account as the price of the shorted security fluctuates. However, an investor has the need to maintain adequate margin with a purchase on margin, meaning that this not a unique risk for a short seller.