Which of the following would substitute for discount loans?

Question

Quizplus · Accepted Answer

Repurchase agreements (also known as repos) involve the sale of securities by a borrower to a lender with an agreement to repurchase them at a higher price at a future date. This is similar to a discount loan, as it provides short-term liquidity for the borrower but with interest charged on the difference between the initial sale price and the repurchase price. Therefore, repurchase agreements can substitute for discount loans. The other options listed are not direct substitutes for discount loans.

Which of the Following Would Substitute for Discount Loans