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Time left 0:55:03Question 3Not yet answeredMarked out of 1.00Flag questionTipsQuestion textIn early 2021, US company GameStop (GME) experienced extreme fluctuations in its share price.In a matter of weeks, GME price started at $18, rose to nearly $350 and then quickly fell back to $40.Which of the following statements is not an accurate comment on the GameStop saga?Question 3AnswerInvestors following the WallStreetBets forum on reddit entered long positions in GME with a goal of subjecting short sellers to a short squeeze.All of the investors who entered long positions in GameStop would have made profits at the expense of the short sellers.Short sellers had taken huge positions in GameStop because they believed GME was overvalued at $18.The dramatic rise in GME price occurred because short sellers had to pay inflated prices to settle their short positions.

Question

Time left 0:55:03Question 3Not yet answeredMarked out of 1.00Flag questionTipsQuestion textIn early 2021, US company GameStop (GME) experienced extreme fluctuations in its share price.In a matter of weeks, GME price started at 18,rosetonearly18, rose to nearly 350 and then quickly fell back to 40.WhichofthefollowingstatementsisnotanaccuratecommentontheGameStopsaga?Question3AnswerInvestorsfollowingtheWallStreetBetsforumonredditenteredlongpositionsinGMEwithagoalofsubjectingshortsellerstoashortsqueeze.AlloftheinvestorswhoenteredlongpositionsinGameStopwouldhavemadeprofitsattheexpenseoftheshortsellers.ShortsellershadtakenhugepositionsinGameStopbecausetheybelievedGMEwasovervaluedat40.Which of the following statements is not an accurate comment on the GameStop saga?Question 3AnswerInvestors following the WallStreetBets forum on reddit entered long positions in GME with a goal of subjecting short sellers to a short squeeze.All of the investors who entered long positions in GameStop would have made profits at the expense of the short sellers.Short sellers had taken huge positions in GameStop because they believed GME was overvalued at 18.The dramatic rise in GME price occurred because short sellers had to pay inflated prices to settle their short positions.

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Solution

The statement that is not accurate about the GameStop saga is: "All of the investors who entered long positions in GameStop would have made profits at the expense of the short sellers."

This is not necessarily true because the profitability of a long position depends on the timing of the investment. While some investors who entered long positions early and sold at the peak would have made profits, those who bought at or near the peak and then held as the price fell would have incurred losses. Therefore, it's not accurate to say that all investors who entered long positions made profits.

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