Stock Short Sale Process

This problem practices the mechanics of short selling, including borrowing shares, selling them in the market, and later buying them back to return to the lender. It also reinforces the economic logic behind the trade, which is that the investor is trying to profit from a decline in share price rather than a rise. Interviewers ask this kind of question to test whether candidates understand basic market structure, the role of securities lending, and how profits and costs are generated in a trade that works differently from a normal long position.