CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

When a stock that pays a dividend is sold short, ______

A. all dividends accrue to the short seller.
B. the buyer of the stock must reimburse the short seller for all dividends.
C. the short seller must reimburse the lender of the stock for all dividends.
D. the short sale must be reversed on the ex-dividend date.
Correct Answer: C

Since the lender of the stock is not in possession of the stock when the dividend is paid, she will not receive it. Therefore, in order to leave the lender in an equivalent position to not having lent the stock, she must be reimbursed the dividend.

User Contributed Comments 4

User Comment
Ricci32387 it is nice to see that the lender is female haha
DonAnd lol!
Inaganti6 feminist brokers ftw !
Cartagena The world's changing. The future is robot.
You need to log in first to add your comment.