| || InvestHub.com's |
Finance Dictionary and Glossary of Investment Terms
Negotiated return of a portion of the interest earned by the lender of stock to a short seller. When a stock is sold short, the seller borrows stock from an owner or custodian and delivers it to the buyer. The proceeds are delivered to the lender. The borrower, who is short, often wants a rebate of the interest earned on the proceeds under the lender's control, especially when the stock can be borrowed from many sources. Note: The seller must pay the lender any dividends paid out or, in the case of bonds, interest that accrues daily during the term of the loan.
1. In a short-sale transaction, the portion of interest or dividends earned by the owner (lender) of shares that are paid to the short seller (borrower) of the shares. 2. In an options transaction, the amount paid to the holder of the option if the option expires worthless.