I understand that if I close a short position on the ex-dividend date then I owe the lender the dividend. It is taken from my account.
Where does the money the company pays for the dividend on those shares go?
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When shares are shorted by B, they are borrowed from A and they are sold to C.
A has a book entry for ownership of the shares but the actual shares are owned by C who receives the dividend from the company. If B is short the shares on the ex-div date, he is required to reimburse A (the lender of the stock) for the dividends that he missed.
So B "sells" to open 1 day prior to the exdate…
as such C is the buyer and due a dividend? But A still gets the dividend so is paid from B. So the company who issues the stock pays... C..?? Then B buys to close and keeps the diff of stock prices(+or-) minus the dividend payment which becomes part of the cost basis.....??