Repurchase agreements are usually used by banks that:

Question

Quizplus · Accepted Answer

Repurchase agreements, also known as repos, are short-term loans backed by securities. Banks often use repos to obtain cash quickly for a short period of time, such as overnight or a few days, to meet their short-term funding needs. Therefore, option B is the best choice. Option A is incorrect because repos are short-term financing, not long-term. Option C is incorrect because banks with negative net worth would find it difficult to find counterparties for repos. Option D is incorrect because banks usually have access to multiple sources of financing.

Repurchase Agreements Are Usually Used by Banks That