A Stock Broker Trades Shares He Does Not Own with an Obligation

Multiple Choice

A stock broker trades shares he does not own with an obligation of later repayment, and in the hope that the price of traded shares will fall. He then repays share debt with shares purchased at a lower price and pockets the spread between initial share price and repayment price. This attempt to profit from a falling stock price is known as _____.

A) insider trading
B) churning
C) arbitrage trading
D) short selling
E) going long