A form of short-term borrowing by dealers in government securities is (are)
A) reserve requirements.
B) repurchase agreements.
C) bankers' acceptances.
D) commercial paper.
E) brokers' calls.

Question

Quizplus · Accepted Answer

Repurchase agreements, or repos, are a form of short-term borrowing for dealers in government securities. In a repo, the dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price. This difference in price represents the interest.

A Form of Short-Term Borrowing by Dealers in Government Securities