An agreement where one party agrees to sell T-bills to another party and at the same time agrees to buy them back at a future date for set price is known as a:
A)repurchase agreement.
B)commercial paper.
C)term loan.
D)negotiable CD.
E)None of the options is correct

Question

Quizplus · Accepted Answer

A repurchase agreement, or repo, is a short-term borrowing arrangement where one party (usually a financial institution) sells securities (in this case T-bills) to another party (usually a counterparty) and simultaneously agrees to buy them back at a future date at a set price, effectively allowing the lender to earn interest on the loan.

An Agreement Where One Party Agrees to Sell T-Bills to Another