Most repurchase agreements are:

Question

Quizplus · Accepted Answer

Repurchase agreements (repos) are typically secured overnight loans in which the borrower sells securities to the lender and agrees to buy them back at a slightly higher price the next day. The securities serve as collateral, making the loan secured. Therefore, option C is the best answer. Option A is incorrect because repurchase agreements are generally considered less risky than fed funds loans, as they are collateralized. Option B is incorrect because repos are secured loans, not unsecured. Option D is partially correct, as repos do involve lending and borrowing of reserves, but the term "secured loans of reserves" doesn't accurately describe the nature of repos. Option E is incorrect because fed funds loans and repos are different types of transactions.

Most Repurchase Agreements Are