Mark-to-market' in a repo means:
A) Revaluing collateral versus cash
B) Revaluing collateral
C) Calculating net present value
D) Calculating the net replacement cost

Question

Quizplus · Accepted Answer

Mark-to-market in a repo means revaluing collateral versus cash. This process is used to ensure that the collateral being used in the repo agreement maintains its value relative to the cash being used as collateral. By revaluing the collateral on a regular basis, the repo parties can ensure that the transaction remains fair and equitable for both parties. Option B is only revaluing the collateral, whereas in a repo the collateral needs to be revalued versus cash. Options C and D are not directly related to the concept of mark-to-market in a repo.

Mark-To-Market' in a Repo Means