SHORT SALE Meaning and
Definition
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A short sale refers to a financial transaction where an individual or entity sells an asset, such as stocks, bonds, or real estate, that they do not currently possess. The seller, often referred to as the short seller, aims to profit from a declining market or asset price.
In a typical short sale, the seller borrows the asset they wish to sell from a third party, such as a brokerage, with the agreement to return the asset at a later date. The short seller then immediately sells the borrowed asset on the open market, with the expectation that its price will decline. If the price does go down, the short seller will then repurchase the asset at the lower price and return it to the lender, pocketing the difference as profit.
Short selling is considered a high-risk strategy due to the potential for unlimited losses. If the price of the asset rises instead of falling, the short seller will have to buy it back at a higher price, resulting in a loss. Moreover, borrowing fees and interest charges may be incurred during the short sale.
Short selling is commonly used by professional investors and traders to hedge against market downturns or to speculate on price declines. It provides an opportunity to profit from the falling value of an asset without actually owning it, contributing to the overall liquidity and efficiency of financial markets.
Top Common Misspellings for SHORT SALE *
* The statistics data for these misspellings percentages are collected from over 15,411,110 spell check sessions on www.spellchecker.net from Jan 2010 - Jun 2012.
Other Common Misspellings for SHORT SALE
- ahort sale
- zhort sale
- xhort sale
- dhort sale
- ehort sale
- whort sale
- sgort sale
- sbort sale
- snort sale
- sjort sale
- suort sale
- syort sale
- shirt sale
- shkrt sale
- shlrt sale
- shprt sale
- sh0rt sale
- sh9rt sale
- shoet sale
Etymology of SHORT SALE
The term "short sale" originated from the stock market and has its roots in the concept of selling short. The word "short" in this context refers to the sale of something that the seller does not actually own at the time of the transaction.
The etymology of the word "short" itself can be traced back to early English, where it originally meant "cut off", "low in stature", or "lacking in height". Over time, it developed additional meanings such as "lacking in supply" or "insufficient in quantity".
In the stock market, a short sale refers to the sale of a security (such as stocks or bonds) that the seller does not possess, with the intention of buying it back at a later date when the price has hopefully declined. By selling high and buying low, the investor aims to profit from the decline in value.
Similar spelling words for SHORT SALE
- short story,
- short subject,
- short selling,
- short sleeve,
- short sleep,
- shortcut,
- shortgrass,
- shortcake,
- shortest,
- short's aster,
- short shrift,
- short-stop,
- short whist,
- shortage.
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