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Finra SIE Exam - Topic 1 Question 18 Discussion

Which of the following responses best describes a short sale?
B) A sale of securities that the investor does not own
A) A sale of securities that results in a loss
C) A sale of securities that results in an unsecured debit balance in the investor's account
D) A sale of securities that the investor had purchased in his cash account but had not yet paid for

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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Shaquana
5 months ago
Definitely B. It's crucial to understand the mechanics of short selling.
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Tuyet
5 months ago
D is confusing. You can't sell what you haven't paid for yet.
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Florinda
5 months ago
C sounds off too. Unsecured debit balance isn't the core idea.
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Laura
5 months ago
A is misleading. Losses can happen, but that's not the definition.
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Devora
5 months ago
Agreed, B makes the most sense. It's all about borrowing.
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James
6 months ago
I think B is the best answer. Short sales involve selling what you don't own.
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Samira
6 months ago
I thought it was just about selling stocks you already bought.
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Basilia
6 months ago
A short sale can definitely lead to losses, but that's not the main point.
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Chandra
7 months ago
Wait, are you sure about that? Sounds risky!
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Grover
7 months ago
Totally agree, it's all about selling what you don't own.
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Jamal
7 months 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
7 months 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
7 months 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
7 months ago
Hmm, I'm torn between B and C. Gotta love these tricky finance questions!
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Orville
8 months 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
8 months 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
8 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
8 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
8 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
8 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
9 months ago
B is the correct answer!
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Trinidad
9 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
9 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
9 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
9 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
10 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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Alpha
4 months ago
Short selling is risky but can be profitable!
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Aleisha
4 months ago
B is the correct choice for sure.
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Shizue
4 months ago
Right! It’s all about betting against the market.
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Brett
4 months ago
Definitely, selling what you don’t own is key.
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Wayne
5 months ago
I agree, B makes the most sense.
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