Series 7 - General Securities Representative Exam
A stock has an extremely high level of short interest. What will happen to the price of the stock if the short traders want to close their position all at the same time?
If all of the shorts want to buy to cover - to close out their short position all at the same time, the price of the stock will go up. Since there is an extremely large level of short interest per the question, the up move in the stock should be large