A repurchase agreement is:

Question

Quizplus · Accepted Answer

A repurchase agreement, commonly referred to as a repo, is an agreement between two parties where one party sells securities to another party and simultaneously agrees to repurchase them at a later date for a slightly higher price. The difference between the sale price and the repurchase price represents the interest earned by the lender. The transaction is usually for a short-term period, often overnight or for a few days, and both parties agree on the specific date for the reverse transaction to occur. Therefore, choice C is the correct answer.

A Repurchase Agreement Is