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Options
-
Only 1 is true
Correct answer
- B
Only 2 is true
- C
Both 1 and 2 are true
Why this is the answer
Short-selling involves selling shares that the seller doesn't own, borrowing them from another party. The risks include counterparty risk and liquidity risk (where the borrowed stock may become difficult to cover at a reasonable price). Securities Lending: While it is done through an approved intermediary, there are still risks such as the failure of the other party to return securities or loss of corporate benefits from the securities lent.
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