A repurchase agreement is best described as

Question

Quizplus · Accepted Answer

A repurchase agreement, also known as repo, is a financial transaction where one party (usually a financial institution) sells a government security to another party (usually the central bank) with a commitment to repurchase it at a specific date and price. The government security serves as collateral for the loan and the interest rate on the transaction is the difference between the sale price and the repurchase price. Therefore, a repurchase agreement is a secured loan with a government security serving as collateral.

A Repurchase Agreement Is Best Described as