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With reference to the Short squeeze, consider the following statements:
1. It is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses.
2. It leads to a dramatic rise in share price, far beyond its fundamentals.
Which of the statements given above is/are correct?       
  • a)
    1 only        
  • b)
    2 only        
  • c)
    Both 1 and 2        
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
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With reference to the Short squeeze, consider the following statements...
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  • Short squeeze is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses.
  • This leads to a sharp rise in demand for the share, and huge rally in share prices.
  • In order to cover his loss, the trader who was initially short on the stock, starts buying the stock, which leads to a sharp rise in the share price of the stock.
  • This phenomenon, where the short seller is buying the stock to cover her loss, is referred to as short squeeze in market parlance.
  • It leads to a dramatic rise in share price, far beyond its fundamentals.
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With reference to the Short squeeze, consider the following statements:1. It is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses.2. It leads to a dramatic rise in share price, far beyond its fundamentals.Which of the statements given above is/are correct? a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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With reference to the Short squeeze, consider the following statements:1. It is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses.2. It leads to a dramatic rise in share price, far beyond its fundamentals.Which of the statements given above is/are correct? a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for Current Affairs 2024 is part of Current Affairs preparation. The Question and answers have been prepared according to the Current Affairs exam syllabus. Information about With reference to the Short squeeze, consider the following statements:1. It is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses.2. It leads to a dramatic rise in share price, far beyond its fundamentals.Which of the statements given above is/are correct? a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Current Affairs 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With reference to the Short squeeze, consider the following statements:1. It is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock’s fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses.2. It leads to a dramatic rise in share price, far beyond its fundamentals.Which of the statements given above is/are correct? a)1 only b)2 only c)Both 1 and 2 d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
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