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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

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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

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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

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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

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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