Institutional Investors & Short Selling

• Analysis: Alt. 1 Alt. 2 Don’t lend Lend

• Dividends

• Yes Yes

• Future stockprice

• Yes Yes

• Interest

• No Yes

• The interest is over and above what Julie would receive if she didn’t lend.

• Therefore, Julie does want to lend the stock.

Institutional Investor

Does she want to lend the stock?

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