Question5 Old McDonald has sold apples that he does not currently hold or expect to harvest anytime soon. He has entered into a: A short position in apples A short put option A long forward contract A plain vanilla swap A holding position in apples ResetMaximum marks: 1 Flag question undefined单项选择题
A
A short position in apples
B
A short put option
C
A long forward contract
D
A plain vanilla swap
E
A holding position in apples

Question

Question5 Old McDonald has sold apples that he does not currently hold or expect to harvest anytime soon. He has entered into a: A short position in apples A short put option A long forward contract A plain vanilla swap A holding position in apples ResetMaximum marks: 1 Flag question undefined单项选择题

A

A short position in apples

B

A short put option

C

A long forward contract

D

A plain vanilla swap

E

A holding position in apples

BlackTom AI · Accepted Answer

The question describes Old McDonald selling apples that he does not currently hold and does not expect to harvest soon. This situation matches a short position, where the seller has contracted to deliver a commodity in the future without owning it today.
Option 1: A short position in apples
This is the correct interpretation because it directly describes selling something you do not own with the expectation of delivering it later, i.e., a short sale of apples.
Option 2: A short put option
A short put would involve selling the right to sell apples at a specified price to someone else. It does not require or imply that the seller currently has or will deliver apples; it centers on the option contract, not a delivery of actual apples.
Option 3: A long forward contract
A long forward contract is an obligation to buy apples at a future date at a pre-agreed price. That contradicts the scenario of selling apples you do not hold, which would be a short position, not a long forward.
Option 4: A plain vanilla swap
A plain vanilla swap typically involves exchanging cash flows (like fixed for floating interest rates or commodity-based payments) and does not entail delivering or selling a physical position of apples. It does not fit the described action.
Option 5: A holding position in apples
Holding a position would imply owning apples or at least being in a position that reflects ownership or possession, which is the opposite of selling something you do not have.
In summary, the described action aligns with taking a short position in apples, while the other options describe different instruments or situations that do not match the scenario as stated.

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Question1 Old McDonald has sold apples that he does not currently hold or expect to harvest anytime soon. He has entered into a: A short put option A plain vanilla swap A holding position in apples A short position in apples A long forward contract ResetMaximum marks: 1 Flag question undefined

Question1 Old McDonald has sold apples that he does not currently hold or expect to harvest anytime soon. He has entered into a: A short position in apples A plain vanilla swap A long forward contract A short put option A holding position in apples ResetMaximum marks: 1 Flag question undefined

Question10 Old McDonald has sold apples that he does not currently hold or expect to harvest anytime soon. He has entered into a: A short put option A long forward contract A short position in apples A plain vanilla swap A holding position in apples ResetMaximum marks: 1 Flag question undefined

Question1 Old McDonald has sold apples that he does not currently hold or expect to harvest anytime soon. He has entered into a: A long forward contract A holding position in apples A short put option A short position in apples A plain vanilla swap ResetMaximum marks: 1 Flag question undefined

Assume you sell short 100 shares of common stock at $30 per share, with initial margin at 50%. What would be your rate of return if you repurchase the stock at $35 per share? The stock paid no dividends during the period, and assume no other transaction costs.

Shorting a stock, where you only make money if the stock goes down, has never been a successful investment strategy, based on the case studies we reviewed in class.

How does a short seller "cover" a short?

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