CFA Practice Question

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CFA Practice Question

The potential gains in a long position generally are ______ and the potential losses are ______.

A. unlimited; no more than the value of the securities
B. no more than the value of the securities; no more than the value of the securities
C. no more than the value of the securities; unlimited
Correct Answer: A

In contrast, the potential gains on a short position are limited to no more than 100 percent whereas the potential losses are unbounded.

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