Repurchase agreements are:

Question

Quizplus · Accepted Answer

Repurchase agreements (repos) are secured overnight loans where one party (usually a bank or dealer) sells securities to another party (usually the Fed or another financial institution) with the agreement to buy them back the next day at a slightly higher price. The securities serve as collateral for the loan, making it a secured transaction. This makes repos less risky than unsecured short-term loans, such as Fed funds loans (B). Additionally, repos are specifically secured by reserves (D) rather than any other type of collateral, making that choice incorrect, and they are not the same as Fed funds loans (E).

Repurchase Agreements Are