A profitable short sale requires the seller to identify a stock that will ______

A. decline in price so that it can be repurchased at a lower price.
B. increase in price so that it can be repurchased at a higher price.
C. increase in price so that it can be repurchased at a lower price.

Correct Answer: A

Short selling is effectively like holding a negative position in the stock; when the stock price increases, the short position loses dollar for dollar (before commissions and fees).