Repo

TenStep Supplemental Paper ____________________________________________________________________________________________________________ 22 June 2004 Re acquire Agreements (Repos)/Ready ahead Transactions A repo is an contract in which a thespian sells security to acquire immediate funds and then agrees to purchase the same or similar securities after a condition judgment of conviction at a given price. The exertion involved in repos contains elements of two the sale/purchase of securities and the operations involved in notes mart borrow and lending. Repo traffics be collateralized short-term lending. The basis of contract are specified as the repo rate, representing the cash merchandise borrowing/lending rate. As in the case of other instruments, repos booster the equilibrium between affect and supply of short-term funds. Internationally, the repurchase agreement (repo) is a varied and perhaps the most popular money market instrument. If the higher up diagram is considered from the buyers perspective, i.e. from Bs perspective, it lead be termed a uprise repo. So, a reverse repo is a mirror image of a repo. Hence, whether a work is a reverse repo or a repo transaction is determined by who has initiated the transaction.

Purpose The seller in the transaction can earn immediate cash in the short-term, without liquidating his or her position in the security. The buyer of the firm go away puddle an avenue to deploy his/her surplus funds. Governments use repurchase agreements to consummation tell of interest rates and liquidity in the mon ey market. These agreements are used to inj! ect/absorb liquidity in the market by the RBI. Operational Aspects Size of the Loan. The size of the contribute is trenchant by the party that initiates the agreement. For example, if a borrower initiates the agreement, he/she willing subside the size of the agreement. Selection of Security. The RBI announces the nature of instruments that will be eligible for...If you want to get a well(p) essay, order it on our website: BestEssayCheap.com

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