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    Question ID:   19823         Current Version: 1
Question: How does short selling work?
Category: Business & Finance > Investing
Keywords: work, stock, trade, short, sale, sell
Type: how
Rating:(0 ratings)    Views: 5    Discussions: 0   In Watch Lists: 1  

 
    Answer:

Typically, when you sell short, your brokerage firm loans you the stock. The stock you borrow comes from either the firm's own inventory, the margin account of other brokerage firm clients, or another lender. As with buying stock on margin, your brokerage firm will charge you interest on the loan, and you are subject to the margin rules. If the stock you borrow pays a dividend, you must pay the dividend to the person or firm making the loan.

Source: SEC

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