Answered

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which of the following statements relating to repurchase agreements (repos) is incorrect? group of answer choices the interest on a repo is paid by the borrower on the repurchase date. repo rates are typically higher when the securities used as collateral are more in demand. repo rates are generally positively related to the term of the repo.

Sagot :

repo rates are typically higher when the securities used as collateral are more in demand, is the incorrect statement.

A repurchase agreement (repo) is a form of short-term borrowing contract for dealers in government securities. In a repo, a dealer often overnight offers investors government assets for sale and then buys the securities back the next day at a little higher price. That slight pricing difference includes the overnight interest rate implicitly. Repos are often used to raise quick cash. They are widely employed by central banks in their open market operations as well.

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