alleryStart learning →In a repo, at what price does the seller buy the security back?
AA much lower price
BA random market price
CA slightly higher price
DA near-zero price
Answer & Solution
Correct answer: C. A slightly higher price
The gap between sale price and the slightly higher repurchase price gives the lender an effective interest rate.
Keep practising Money Market
Browse all Money Market questions for CA Foundation, or explore more Business Economics topics.
Related questions
Eurodollar deposits are deposits in US dollars held where?Trading companies often buy bankers' acceptances to pay whom?Federal funds are usually lent on what basis?Accrual instruments are issued at face value and mature at what amount?How does a T-bill investor earn a return?Treasury bills (T-bills) are zero-coupon securities maturing in how long?What does a CD ladder strategy do?A longer CD term usually earns a higher rate, except when which condition applies?