Which of the following money market investments is essentially a loan arrangement wherein the investor buys securities from the securities dealer,with an agreement to sell the securities back to the dealer at a later date for a specified higher price?
A)Certificates of Deposit (CD)
B)Commercial Paper
C)Banker's Acceptance
D)Repurchase Agreement
E)Treasury Bill

Question

Quizplus · Accepted Answer

This describes a repurchase agreement, where the investor buys securities from the dealer and agrees to sell them back for a higher price at a later date, essentially serving as a short-term loan for the dealer. The other options (CDs, commercial paper, banker's acceptance, and Treasury bills) do not involve this specific loan arrangement.

Which of the Following Money Market Investments Is Essentially a Loan