What is the definition of Repurchase Agreement / Repo?
A Repurchase Agreement or a Repo is an agreement where the seller will buy the same security he sold at a specified price and date. This enables the seller, who is actually a borrower, to use a financial instrument such as a security for collateral. The agreed upon price would have a fixed rate of interest and the agreed upon repurchase date signifies the length of the loan.
A repurchase agreement is like a cash transaction that uses a forward contract. Money is exchanged between the seller and buyer as the security is legally transferred to the buyer. The forward contract pertains to the legal agreement that obligates the seller to repurchase the security and thus repay the loan and recover the collateral.
A repurchase agreement is a money-market instrument and is used when the seller needs some short-term capital.
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- Reserves
- Residual Disability Insurance
- Residual Disability
- Residual Market
- Retention
- Retrocession
- Retrospective Rating
- Return on Equity
- Revocable Beneficiary
- Rider
- Replacement Cost
- Renters Insurance
- Renewable Term Insurance Policy
- Relation of Earnings to Insurance Clause
- Reinsurance
- Reinstatement
- Registered Representative
- Registered Principal
- Reduced Paid-Up Insurance Option
- Redlining