Final answer:
In a securities lending arrangement, the lender maintains beneficial ownership of the securities, retaining economic interest and voting rights while only transferring possession to the borrower. The answer is option B.
Step-by-step explanation:
In a securities lending arrangement, beneficial ownership refers to the rights to receive dividends or interest, the economic benefits of the securities, and the right to vote on the shares if applicable. In this context, the lender maintains beneficial ownership of the securities throughout the transaction.
Despite temporarily transferring the physical possession of the securities to a borrower, the lender retains all the benefits of ownership, and the transaction is fully collateralized in case the borrower is unable to return the securities.