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Short sale

• The sale of securities not owned by the seller in the expectation that the price of these securities will fall or as part of an arbitrage. A short sale must eventually be covered by a purchase of the securities sold. Short seller borrow the asset (not owned), sells it and the later purchases the asset (hopefully at a lower price) and returns to the original party that the asset was borrowed from. One would do a short sale if you expect the price of the asset to fall and you do not own the asset to begin with.

• Selling a security that the seller does not own but is committed to repurchasing eventually. It is used to capitalize on an expected decline in the security's price.

 
 

Follow this link for all the terms related to short.

 
 Embedded terms in definition
 Arbitrage
Asset
Borrow
Purchase
Sale
Securities
Security
Short
Will
 
 Related Terms
 

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