Which of the following money market investments is essentially a loan arrangement wherein a securities dealer is the "borrower" and the investor is the "lender?" The investor buys securities from the securities dealer,with an agreement to sell the securities back to the dealer at a later date for a specified higher price.

Question

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The described investment is a repurchase agreement, or repo. The securities dealer effectively borrows money from the investor by selling securities with an agreement to repurchase them at a later date. The investor earns a return on the investment through the difference in price between the initial purchase price and the higher repurchase price.

Which of the Following Money Market Investments Is Essentially a Loan