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The text explains how individuals can rent out a spare room in their house, similar to lending stocks through stock lending agreements. The agreement involves a lender and a borrower, with the latter having the opportunity to make money by borrowing the stock before returning it at a specified time. Short selling is a common strategy used in these agreements. An example involving three parties - Jack, Alice, and a broker - owning Apple stock worth $300 is provided to illustrate the concept.