Short Selling following, interest, investor, material, received

karoliukas

I am following kaplan material to study. According to the text the short seller must pay all dividends that the lender would have received from the security that has been loaned to the short seller.( Study session 13 page 213 )

However, in an example afterwards when it is calculating the gain on the whole transaction for the investor it adds up the gain from the mark up of the price of the stock after one year, the dividends received and deducts the interest paid to the broker and the commission on the sale.

By investor i get to understand it means the shortseller, but why does it add up the dividends from the stock as profit when they have to be paid to the lender.

Unless it's something i do not get from the first paragraph..

Thanx in advance

MythosHF

really thanx . that's what happens if u study something after midnight. thought it was a problem in short selling since it just followed... needed the sleep i guess. really thanx.

Ionutzakis

If you are talking about following example in 214 page then you are a bit mistaken. That example is about long position, not short.