The repo margin on a repurchase agreement is most likely to be lower when:

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A lower repo margin typically occurs when the underlying collateral is in short supply because this increases demand for the agreement, providing benefits to both parties involved. It may also lead to a lower interest rate on the agreement. On the other hand, a longer maturity and higher credit risk associated with the underlying collateral usually results in a higher repo margin to compensate for the increased risk and opportunity cost.

The Repo Margin on a Repurchase Agreement Is Most Likely