What is the primary purpose of short selling, indicated by the acronym SI?

The primary purpose of short selling, indicated by the acronym SI, is to speculate on declining stock prices. Short selling involves borrowing shares of a stock and selling them on the market with the intention of buying them back later at a lower price. This strategy enables investors to profit from the decline in the stock’s price. If successful, the short seller can then return the borrowed shares—having purchased them back at a reduced price—thus realizing a profit from the difference in prices.

In this context, the other choices do not align with the fundamental concept of short selling. Investing in high-growth stocks typically involves purchasing shares in companies with the expectation that their stock prices will increase, which is the opposite of short selling. Buying undervalued stocks focuses on long positions where an investor anticipates an increase in value over time. Lastly, avoiding market risks is more aligned with hedging strategies rather than short selling, which inherently comes with significant risk due to the potential for unlimited losses if the stock price rises instead of falls.