When you open a brokerage account, you typically sign an agreement giving the broker the right to lend your shares without notifying or compensating you. Why do brokers want you to sign this...

When you open a brokerage account, you typically sign an agreement giving the broker the right to lend your shares without notifying or compensating you. Why do brokers want you to sign this agreement?

Suppose a stock pays a quarterly dividend of $3. You plan to hold a short position in the stock across the dividend ex-date. What is your obligation on that date? If you are a taxable investor, what would you guess is the tax consequence of the payment?

(In particular, would you expect the dividend to be tax deductible?) Suppose the company announces instead that the dividend is $5. Should you care that the dividend is different from what you expected?