Reverse Repurchase Agreement
What Does Reverse Repurchase Agreement Mean?
The purchase of securities with the agreement to sell them at a higher price at a specific future date.
For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement.
Investopedia explains Reverse Repurchase Agreement
Repos are classified as a money-market instrument. They are usually used to raise short-term capital.
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