Jimmieboy
May 16, 2009, 04:48 AM
Hey everyone! Just hoping for some help! I have a univeristy assignment due on Tuesday and I'm struggling to understand the question which is:
"If short selling of securities is banned in the spot market, how do you think it would impact the futures market for those securities?"
Alright, so I understand that you can short sell a security and make a profit when the price of a security falls in value okay? What I don't understand is, what the corresponding futures market would be for a security. i.e. I could short sell BHP, but what would happen in the futures market with that security? Isn't short-selling using the futures market anyway?
"If short selling of securities is banned in the spot market, how do you think it would impact the futures market for those securities?"
Alright, so I understand that you can short sell a security and make a profit when the price of a security falls in value okay? What I don't understand is, what the corresponding futures market would be for a security. i.e. I could short sell BHP, but what would happen in the futures market with that security? Isn't short-selling using the futures market anyway?
