Question 14 In March of 2021, the short sell strategy employed by hedge funds came into the media news. There were sever

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Question 14 In March Of 2021 The Short Sell Strategy Employed By Hedge Funds Came Into The Media News There Were Sever 1 (95.58 KiB) Viewed 33 times

Question 14 In March of 2021, the short sell strategy employed by hedge funds came into the media news. There were several hedge funds that had deemed Game Stop (GME) to be in financial difficulties and its outlook was not good. The ratios on cash flows and returns were weak. Even though the stock of GME was selling at between $3.00 and $5.00 a share, these hedge funds believed that GME was overvalued! They collectively made a decision to short the stock at $3.00 as they believed it was only worth $1.00 or less. These firms shorted hundreds of thousands of shares at this $3.00 price. In the course of a week, after the short, the price of GME rose to $399 per share. What was the payoff for each share of stock? A B Lost $396 for every share shorted. Gained $401 for every share shorted. Gained the short price proceeds of $3.00 for every share shorted. 5 Points Gained $396 for every share shorted.