When investors sell short, they are essentially lending the stock to another investor and will ultimately receive that stock back from the investor to whom they lent it.

Question

Quizplus · Accepted Answer

When investors sell short, they borrow the stock from a broker, sell it, and then hope to buy it back later at a lower price to return it to the broker, not to the investor from whom they borrowed.

When Investors Sell Short, They Are Essentially Lending the Stock