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PRMIA Exam 8006 Topic 6 Question 89 Discussion

Actual exam question for PRMIA's 8006 exam
Question #: 89
Topic #: 6
[All 8006 Questions]

The forward price of a physical asset is affected by:

Show Suggested Answer Hide Answer
Suggested Answer: A

A short squeeze results when short sellers are trying to cover their short positions by buying in the spot markets, which do not have adequate supply. This results in sharp spikes in spot prices, which further forces any other shorts to try cut their losses. The result is a sharp rise in spot prices.

Choice 'a' is the correct answer, the other choices do not describe a short squeeze.


Contribute your Thoughts:

Justine
11 months ago
This 'short squeeze' thing sounds like a fancy way of saying 'when the market turns against you.' Option A is my pick.
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Raylene
11 months ago
I think it's when spot prices increase due to shorts trying to cover their positions.
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Maryanne
11 months ago
I agree, a 'short squeeze' can really catch traders off guard.
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Kirby
12 months ago
A sharp increase in spot prices due to shorts covering? Sounds like a financial version of a 'hot potato' game to me. Option A gets my vote.
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Lisha
11 months ago
Lashawnda: That's why option A makes the most sense, shorts scrambling to cover their positions.
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Lashawnda
11 months ago
Definitely, it's all about trying to avoid being left holding the bag.
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Luke
11 months ago
I agree, it does seem like a game of hot potato with stocks.
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Allene
12 months ago
Hmm, I'm not sure. Option A does sound the most plausible, but I'll have to think this one through a bit more.
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Kerry
11 months ago
It's always good to take your time and think things through before making a decision.
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Vincenza
11 months ago
Short squeezes can definitely cause a sharp increase in spot prices.
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Providencia
12 months ago
I think you're on the right track with option A.
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Sylvia
1 years ago
I agree with Alexis, because when shorts try to cover their positions, it can lead to a sharp increase in spot prices.
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Alexis
1 years ago
I think a 'short squeeze' refers to A) a sharp increase in spot prices due to a shortage in the spot market as shorts try to cover their positions.
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Derick
1 years ago
A short squeeze? More like a 'short leap of faith' if you ask me. Option A seems like the clear winner here.
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Laurel
11 months ago
Yeah, shorts trying to cover their positions can really drive up prices quickly.
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Angelyn
11 months ago
I agree, a short squeeze can definitely lead to a sharp increase in spot prices.
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Yvette
12 months ago
Short squeezes can really shake up the market, it's all about those spot prices rising due to shortages.
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Hyun
12 months ago
I agree, option A is definitely the most likely scenario in a short squeeze.
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Vincenza
12 months ago
Short squeezes can definitely lead to sharp increases in spot prices due to shortages.
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Lavera
12 months ago
I agree, option A is the most likely scenario in a short squeeze.
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