A matched sale-purchase transaction is also known as a
A)reverse repo.
B)discount loan.
C)put option.
D)federal funds loan.

Question

Quizplus · Accepted Answer

A matched sale-purchase transaction, or MSPT, is also commonly known as a reverse repo. This is a type of transaction where an investor sells a security to another investor, with an agreement to buy it back at a later date for the same price. The investor buying the security essentially lends money to the investor selling the security, with the security serving as collateral. At the end of the term, the seller must buy back the security at the agreed-upon price, and the buyer earns a return on the investment. MSPTs are commonly used in fixed-income markets to generate short-term financing, manage risk, or engage in speculation.

A Matched Sale-Purchase Transaction Is Also Known as a