Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros andmdash; like a true bear smacking its lips andmdash; as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a companyandrsquo;s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stockandrsquo;s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the worldandrsquo;s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer?

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Direction: Kindly read the passage carefully and answer the questions given below.

The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for ₹100 and then buy it for ₹80, pocketing ₹20 profit (pre-tax and charges).

Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.

Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.

Q. What can be concluded about short selling from the passage?

a)
The practice of short selling on the securities market is prohibited.
b)
Short sellers consistently wager on rising asset prices.
c)
Short selling entails initially selling a securities and afterwards purchasing it.
d)
A contentious and dangerous investment tactic is short selling.

Correct answer is option 'D'. Can you explain this answer?

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Direction: Kindly read the passage carefully and answer the questions ...

The passage delves into the concept of short selling, highlighting its controversial and risky nature as perceived by many investors. The author points out that short selling contradicts the widely promoted buy-and-hold philosophy in traditional investing. Short sellers are portrayed as outliers because they wager on asset prices decreasing, which stands in contrast to the expectations of most investors. Furthermore, the passage acknowledges that while short selling can be effective in specific situations, it also carries the potential for adverse outcomes. Therefore, it can be deduced that short selling is indeed a contentious and hazardous investment strategy. Option A is inaccurate because the passage explicitly mentions that short selling is a legal practice recognized by securities market regulators in most countries. Option B is incorrect as the passage clearly states that short sellers bet on asset prices going down, not rising. Option C is partially correct but lacks completeness, as it only describes the process of short selling without drawing any inferences about its nature. Only option D directly implies the inferred contention and is thus the correct answer.

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Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What could be a probable consequence of short selling gaining a reputation as a contentious practice?

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Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.Which of the following undermines the case against short selling as presented in the passage?

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Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.Which of the following provides additional support for the case in favor of short selling as outlined in the passage?

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Most large corporations in the United States were once run by individual capitalists who owned enough stock to dominate the board of directors and dictate company policy. Because putting such large amounts of stock on the market would only depress its value, they could not sell out for a quick profit and instead had to concentrate on improving the long-term productivity of their companies. Today, with few exceptions, the stock of large United States corporations is held by large institutions—pension funds, for example—and because these institutions are prohibited by antitrust laws from owning a majority of a company’s stock and from actively influencing a company’s decision-making, they can enhance their wealth only by buying and selling stock in anticipation of fluctuations in its value. A minority shareholder is necessarily a short term trader. As a result, United States productivity is unlikely to improve unless shareholders and the managers of the companies in which they invest are encouraged to enhance long-term productivity (and hence long-term profitability), rather than simply to maximize short-term profits.Since the return of the old-style capitalist is unlikely, today’s short-term traders must be remade into tomorrow’s long-term capitalistic investors. The legal limits that now prevent financial institutions from acquiring a dominant shareholding position in a corporation should be removed, and such institutions should be encouraged to take a more active role in the operations of the companies in which they invest. In addition, any institution that holds twenty percent or more of a company’s stock should be forced to give the public one day’s notice of the intent to sell those shares. Unless the announced sale could be explained to the public on grounds other than anticipated future losses, the value of the stock would plummet and, like the old-time capitalists, major investors could cut their losses only by helping to restore their companies’ productivity. Such measures would force financial institutions to become capitalists whose success depends not on trading shares at the propitious moment, but on increasing the productivity of the companies in which they invest.Q. According to the passage, the purpose of the requirement suggested in lines "In addition, any institution that holds twenty percent or more of a company’s stock should be forced to give the public one day’s notice of the intent to sell those shares." would be which of the following?

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In his historic address to the Parliament of the World's Religions in Chicago in 1893, Swami Vivekananda declared, "I am proud to belong to a nation which has sheltered the persecuted and the refugees of all religions and all nations of the earth." It is ironical that a political party which conspicuously proclaims its allegiance to Swami Vivekananda has restricted by law, about 127 years later, citizenship to people on the grounds of both religion and nation.Looking back, it is pertinent to ask why Jawaharlal Nehru, an international statesperson and a leading moral voice in the community of nations, refused to sign the 1951 Refugee Convention relating to the Status of Refugees.Scholars suggest that whereas he was committed to the principles enshrined in the Convention, he was unwilling to legally bind the country to its obligations.The Convention first defines refugees as persons fleeing persecution on grounds of race, religion, nationality, social group or political opinion. Refugees get legal rights, most important of which are "non-refoulement", which prevents states from sending back refugees to persecution in their home countries. They also get secondary rights, such as to education, work and property.India needs to bring in a refugee law which conforms to international conventions. This would, first, recognise eligible undocumented immigrants as refugees, based on evidence determined by due process of their persecution in their home countries. This would also assure them a set of binding rights. The most important of these is the guarantee that they would not be forced to return to the conditions of persecution, threatening their lives and liberty, which they escaped. The second is that they would be assured lives of dignity within India, with education, health care and livelihoods. Only then would India become the country which Swami Vivekananda was so proud of: a haven to the persecuted of the world, untainted by discrimination based on religion or nation.Q. Under International Law on Refugees it is the moral obligation of state to admit refugees who have no other place of residence subject to security of the state. Rohingyas are a group of Muslim refugees from Myanmar. They have settled in Bangladesh, India and other nearby countries due to violence by other groups against them. They have been official indicted by intelligence agencies in terrorist activities in collusion with some militant organizations. The government of India passed an executive order banning their further entry. Decide.

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Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer?

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Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer? for CLAT 2025 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CLAT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer?.

Solutions for Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.

Here you can find the meaning of Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Direction: Kindly read the passage carefully and answer the questions given below.The scathing report by Hindenburg Research on the Adani Group has put the spotlight on short selling, a practice nearly as old as the stock market. Regulators around the world, the courts, investing masses...everybody has once again started taking notice of short sellers aka the misfits in the investing world. Why? Because, in the conventional investing world, the buy and hold philosophy is heavily marketed as the cure for all investment maladies, and everybody expects asset prices to only rise. So, swimming against the tide by selling something first, contrary to buying first, brings its share of controversies. This could be why short sellers are seen as outcasts as they bet on asset prices going down! But for every Warren Buffett, or Rakesh Jhunjhunwala in the long only investment world, there would be a Jim Chanos or George Soros — like a true bear smacking its lips — as they seek out yet another security whose shares, they believe to be overvalued, whether by exuberance or fraud or simply based on technical. Here is a lowdown on short selling, how and why investors do it, the pros and cons, local and global perspective, and much more. Short selling, or shorting, is a tricky concept primarily because we are not used to shorting in our day-to-day transactions. Be it groceries, apparel, real estate, eating out, travel et c., we buy it first. The current price, subconsciously, is held out to be right. So, buying first is a highly intuitive transaction. To generate profit in investments, buying first means the entry price has to be lower than the exit price. However, in a short sale, the transactions are carried out in the exact opposite direction i.e., to sell first and buy later. For instance, you first sell a security for 100 and then buy it for 80, pocketing 20 profit (pre-tax and charges).Equity short sellers typically use one or more of the following approaches to identify targets they feel trade at higher prices than they should. Fundamental analysis: Analysing a company’s financials helps them determine if its stock may be a candidate for a decline in price. An impactful change in fundamentals warrants such a stance. Technical analysis: Patterns in a stock’s price movement help determine if the stock is on the cusp of a downtrend. Technical based shorting is practised every day by traders in the spot market or by using derivative instruments. Typically, technical short sellers use scenarios such as selling a pullback in a downtrend, entering within a trading range and waiting for a breakdown, or selling into an active decline. Thematic research: This approach involves betting against companies whose business models or technologies are outdated and thus face implosion. A popular example here is the large institutional short selling of the shares of GameStop, which backfired in 2021. Forensic short selling: Spotting cooked up Balance sheets or outright frauds comes under this category. Some of the world’s most astonishing frauds have come to light, thanks to such short sellers. Such frauds usually took place in companies involved in the hottest sectors of those times.Regulated short selling is legal practice. Securities market regulators in most countries, in particular, in all developed securities markets, recognise it. The International Organisation of Securities Commissions (IOSCO) reviewed short selling and recommended transparency, rather than prohibiting it. Short selling can be effective under a few scenarios but the sword can cut both ways and be counterproductive too.Q.What can be concluded about short selling from the passage?a)The practice of short selling on the securities market is prohibited.b)Short sellers consistently wager on rising asset prices.c)Short selling entails initially selling a securities and afterwards purchasing it.d)A contentious and dangerous investment tactic is short selling.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CLAT tests.

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