Equity Hedge Fund Assignment
February 24th, 2020
An equity hedge fund is considering the following trades.
The hedge fund has a very negative view on firm XX and short sells the stock at $100 per share. The price goes up to $110 and the shares are recalled by the securities lender. Which of the following is true?
Group of answer choices
The hedge fund can always continue to short sell and will eventually recover its loss if the original research was correct.
The hedge fund can be forced to cover its short position at a loss of $10 per share.
The hedge fund realizes a profit of $10 from this trade.
The whole premise is wrong because you cannot sell something you don’t own. Get Finance homework help today