To profit if you believe the stock price will go down, you should **sell short** 20 shares. This means you sell shares you do not own, hoping to buy them back at a lower price later. **Answer:** \[ \boxed{-20} \] You should enter **-20** for selling or short-selling 20 shares.

# Problem Objective You believe that the stock price of Google, currently at $578, will decline. You wish to take advantage of this potential drop by trading 20 shares. The goal is to determine whether to buy or sell these shares. # Available Data - Current stock price of Google: \( P = 578 \) USD - Number of shares to trade: \( N = 20 \) - Available savings: \( S = 10,000 \) USD - Monthly interest rate: \( r = 0.1\% \) # Approach Since you expect the stock price to decrease, the appropriate action is to **short-sell** the shares. This means you will sell shares you do not own, intending to repurchase them later at a lower price. # Steps to Short-Sell 1. **Short-Selling Shares:** - When you short-sell 20 shares, you sell them at the current price. - The total amount received from short-selling is: \[ \text{Total Revenue} = N \times P = 20 \times 578 = 11,560 \text{ USD} \] 2. **Using Borrowed Shares:** - You are effectively borrowing these shares to sell them. - You do not need to use your savings to buy these shares upfront. 3. **Expected Outcome:** - If the stock price falls, you can buy back the shares at a lower price to close the short position. - Your profit will be the difference between the initial selling price and the lower buying price. # Conclusion To profit from your expectation that the stock price will fall, you should short-sell 20 shares. # Final Answer \[ \boxed{-20} \] This indicates that you should sell or short-sell 20 shares of Google.

# Explanation of Key Concepts ## Short-Selling Shares Short-selling involves selling shares that you do not own, anticipating that the stock price will decrease. By doing this, you aim to profit from the price difference when you repurchase the shares later at a lower price. ## Using Borrowed Shares In a short sale, shares are borrowed from a broker to sell them. You do not purchase these shares upfront, which allows you to sell without using your own capital initially. This borrowing creates an obligation to return the shares after the sale. ## Expected Outcome The expectation is that the stock price will decline after the short sale. If this occurs, you can buy back the shares at a lower price, resulting in profit calculated as the difference between the selling price and the repurchase price.