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Finra SIE Exam - Topic 1 Question 18 Discussion

Actual exam question for Finra's SIE exam
Question #: 18
Topic #: 1
[All SIE Questions]

Which of the following responses best describes a short sale?

Show Suggested Answer Hide Answer
Suggested Answer: B

Step by Step Explanation:

Short Sale Definition: Involves selling borrowed securities with the expectation of repurchasing them at a lower price.

Investor Ownership: Short sales do not involve securities already owned by the seller.

Other Options: None of the other choices accurately define a short sale.


SEC Regulation SHO (Short Selling): SEC Short Sales.

by Raymon at Nov 23, 2025, 06:16 AM

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Basilia
9 hours ago
A short sale can definitely lead to losses, but that's not the main point.
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Chandra
6 days ago
Wait, are you sure about that? Sounds risky!
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Grover
11 days ago
Totally agree, it's all about selling what you don't own.
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Jamal
16 days ago
B) A sale of securities that the investor does not own. Bingo! That's the classic short sale scenario.
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Lindsey
21 days ago
A) A sale of securities that results in a loss. Well, that's true, but it's not the best description of a short sale.
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Gertude
26 days ago
D) A sale of securities that the investor had purchased in his cash account but had not yet paid for. Wait, what? That can't be right.
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Pilar
1 month ago
Hmm, I'm torn between B and C. Gotta love these tricky finance questions!
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Orville
1 month ago
B) A sale of securities that the investor does not own. That's the classic definition of a short sale.
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Myrtie
1 month ago
I feel like option C might be relevant too, but it doesn't really capture the essence of what a short sale is. I think B is the best choice.
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Shantell
2 months ago
I’m a bit confused. I thought a short sale could also lead to a loss, but that might just be part of the risk involved.
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Stephaine
2 months ago
I remember practicing a question like this, and I think a short sale involves borrowing the securities first. So, B seems right, but I'm not completely sure.
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Shawna
2 months ago
I remember learning about short sales in class. I think the key is that it involves selling securities you don't have, rather than just a sale that results in a loss. I'll go with B.
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Tula
2 months ago
I think a short sale is when you sell securities you don't own, so I’m leaning towards option B.
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Goldie
2 months ago
B is the correct answer!
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Trinidad
2 months ago
Okay, let me think this through. A short sale is when you sell securities you don't own, with the goal of buying them back at a lower price later. I'm pretty sure that's the right definition.
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Belen
3 months ago
C) A sale of securities that results in an unsecured debit balance in the investor's account. Sounds like the right answer to me.
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Kayleigh
3 months ago
I'm a bit confused on the differences between the options here. I know a short sale is related to selling securities, but I'm not sure which one fully captures the definition. I'll have to think about this one some more.
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Caprice
3 months ago
Hmm, I'm not totally sure about this one. I know a short sale has to do with selling securities, but I'm not confident about the specifics.
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Shantell
3 months ago
I think the answer is B - a short sale is when you sell securities you don't actually own.
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