In exchange for the tailor-made maturity date provided by the repurchase agreement, a bank or security dealer provides a return slightly below than obtainable through outright purchase of similar marketable securities.

Question

Quizplus · Accepted Answer

This statement is true. A repurchase agreement involves the sale of securities with an agreement to repurchase them at a later date, and the bank or security dealer typically provides a lower return than the outright purchase of similar securities as compensation for the customized maturity date.

In Exchange for the Tailor-Made Maturity Date Provided by the Repurchase