In a repo transaction (or repurchase agreement), the one "buying" the collateral asset (with the promise of selling it back soon) is the
A) lender.
B) borrower.
C) broker.
D) speculator.

Question

Quizplus · Accepted Answer

In a repo transaction, the party "buying" the collateral asset is the lender. They lend money to the borrower, who provides the collateral in the form of securities, with the agreement that the borrower will buy back the securities at a later date for a slightly higher price. The lender benefits by earning interest on the loan, while the borrower benefits by obtaining short-term financing. The broker may facilitate the transaction, but is not the one "buying" the collateral asset. The speculator is not involved in a repo transaction.

In a Repo Transaction (Or Repurchase Agreement), the One "Buying