The agreement which incurs the transaction between two parties and promise held that second party will repurchase security at specific price is classified as ___________?
Correct answer: C. repurchase agreement
- A. repurchasing commercial notes
- B. repurchase bills
- C. repurchase agreement
- D. reverse repurchase agreement
Explanation
A repurchase agreement is a sale of securities with a promise by the seller to repurchase them later at a specified price. A reverse repo describes the same transaction from the buyer’s or lender’s perspective.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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