Q. In the context of financial markets, short selling refers to:

[A] Buying a security with the expectation that its price will increase.

[B] Lending money to a company to finance its operations.

[C] Selling a borrowed security with the expectation that its price will decrease.

[D] Purchasing a government bond with a fixed interest rate.

Answer: C
Notes:

Explanation – In the context of financial markets, short selling is a strategy where an investor borrows a security, such as a stock, and sells it on the market, anticipating that its price will decrease. Short selling is a way to profit from falling prices, but it carries significant risks. If the price of the security increases instead of decreasing, the investor can face unlimited losses, as there is no cap on how high a stock price can go.

Source: The Hindu

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