Stocks on the hard to borrow list are shortable - but with high borrowing costs. The costs vary for each issue. The client can short it, but with higher borrowing costs

Series 7 - General Securities Representative Exam

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Unit 1 Unit 2 Unit 3 Unit 4

A client of yours calls you and wants to short a stock. You are checking the quotes and see it is on the Hard To Borrow list. What do you tell the client?

You cannot short the stock

You can short the stock, but have to pay a higher borrowing costs

You can only short the stock if you can pledge the underlying shares in one of your brokerage accounts

You can short the stock, but it is on the hard to borrow list. So, you have to find someone to pledge the underlying stock as collateral - if you don't own the shares