What is the defining characteristic of a short sale in trading?

Buying an asset first and selling it later Selling an asset first and buying it later Holding an asset for the long term Investing in a diversified portfolio of assets

In the context of the stock market, what does it mean to be "long" on a particular stock?

Expecting the stock price to decline Having a negative outlook on the company's future Betting that the stock price will increase Shorting the stock to profit from a downward trend

What is the primary motivation behind shorting a stock?

To profit from an anticipated increase in the stock's price To gain ownership in a company with strong growth potential To generate income through dividends and interest payments To capitalize on an expected decline in the stock's price

Why is shorting in the spot market typically restricted to intraday trading?

The exchange requires immediate delivery of shorted shares Shorting for longer durations is considered too risky Traders prefer the flexibility of daily profit-taking Regulations prohibit overnight short positions in the spot market

What is a key advantage of shorting in the futures market compared to the spot market?

Lower margin requirements for short positions The ability to hold short positions overnight Greater liquidity and trading volume Reduced risk of short delivery penalties