SIE Exam Question 513: Answer and Explanation

Question: 513

Which of the following subjects the investor to unlimited risk?

• A. Converting a bond into the underlying common stock.
• B. Selling stock short.
• C. Selling common stock long.
• D. Buying a speculative bond.

Correct Answer: B

Explanation:

B: Selling stock short will expose an investor to unlimited risk because there is no limit as to how high a stock price can go.