When the Fed undertakes a "repo" transaction with a financial institution, the Fed in essence
A)grants a collateralized loan to the financial institution.
B)provides an insurance coverage to the financial institution.
C)buys shares of stock of the financial institution.
D)reduces the reserves of the financial institution.

Question

Quizplus · Accepted Answer

In a repo transaction, the Fed provides a short-term loan to a financial institution, with securities as collateral.

When the Fed Undertakes a "Repo" Transaction with a Financial