A securities lending transaction is the temporary transfer of a security to a borrower with all of the following characteristics except?

In a securities lending transaction, one of the key characteristics is that the borrower provides collateral to the lender. This mitigates the risk for the lender since the collateral serves as a guarantee against the default of the borrower. Additionally, the borrower is required to return identical securities upon the completion of the loan, which emphasizes the temporary nature of the transaction and ensures that the lender can reclaim their original securities.

When it comes to income distributions, it is important to note that typically, the lender is entitled to any income distributions (like dividends) that would have accrued during the lending period. In many cases, while the borrower may receive dividends during the borrowing period, they are often required to compensate the lender for those distributions. Therefore, the assertion that the borrower keeps all income distributions does not hold true for securities lending transactions since the original intention is for the lender to maintain the economic benefits of their securities. Hence, opting for this option reveals a misunderstanding of the nature of these transactions.