Short Selling and Margin Trading Quiz

What is a key requirement for a trader to engage in short selling?

• A retirement account

• A margin-approved account

• A cash account

• A savings account

What does the 'ETB' label indicate when checking the availability of a company's shares?

• Easy to borrow

• Estimated trading balance

• End of trading block

• Excessive trading ban

What additional cost might you incur when shorting a hard-to-borrow stock?

• A service charge

• A dividend fee

• A hard-to-borrow fee

• A transaction fee

What happens to your buying power when you short a stock?

• It increases

• It remains the same

• It decreases

• It doubles

How can you monitor your short positions on the thinkorswim platform?

• Through the Monitor tab

• Through the Trade tab

• Through the Settings tab

• Through the Account tab

What indicates a gain in a short position?

• When the Trade Price is lower than the Mark

• When the Trade Price is higher than the Mark

• When the Trade Price equals the Mark

• When the Trade Price is zero

What must you do to close a short position?

• Transfer the shares

• Hold the shares

• Buy the shares

• Sell more shares

What is a watchlist used for in trading?

• To display stocks you have borrowed

• To track stocks you own

• To list stocks you have sold

• To monitor stocks you might trade

What feature can be added to a watchlist to help with short selling?

• Dividend Yield

• Short Sale Borrow Rate

• Market Cap

• P/E Ratio

Why is it important to have a plan when short selling?

• To define when to open and close trades

• To ensure dividends are received

• To avoid paying taxes

• To maximize profits