Repurchase Agreement (RPs)transactions are perceived to be less risky than equivalent Federal funds transactions.

Question

Quizplus · Accepted Answer

Repurchase agreements involve the transfer of securities as collateral for short-term loans, making them less risky than unsecured Federal funds transactions. The collateral helps to mitigate the counterparty risk involved in these transactions. Therefore, RPs are generally considered to be less risky than equivalent Federal funds transactions.

Repurchase Agreement (RPs)transactions Are Perceived to Be Less Risky Than