Term Repurchase Agreement

DEFINITION of 'Term Repurchase Agreement'

Under a term repurchase agreement, a bank will agree to buy securities from a dealer and then resell them a short time later at a preset price. The difference between the purchase and sale prices represents the interest paid for the agreement. Term repurchase agreements are used as a short-term cash-investment alternative.

BREAKING DOWN 'Term Repurchase Agreement'

Banks and other savings institutions that are holding excess cash quite often employ these instruments, because they have shorter maturities than certificates of deposit. Term repurchase agreements also tend to pay higher interest than overnight repurchase agreements because they carry greater interest-rate risk, since their maturity is greater than one day.
 

RELATED TERMS
  1. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities. ...
  2. Retail Repurchase Agreement

    An alternative to regular savings deposits. Under a retail repurchase ...
  3. Direct Repurchase

    The buying of shares in a publicly-traded company by the company ...
  4. Share Repurchase

    A program by which a company buys back its own shares from the ...
  5. Normal-Course Issuer Bid - NCIB

    A Canadian term for a company repurchasing its own stock from ...
  6. Rule 10b-18

    An SEC rule that provides a "safe harbor" for companies and their ...
Related Articles
  1. Investing

    What's a Reverse Repurchase Agreement?

    A reverse repurchase agreement is the buyer side of a repurchase agreement (also called a repo).
  2. Markets

    Repurchase Agreement

    A repurchase agreement is the equivalent of a short-term collateralized loan. An owner of marketable securities sells those securities to a buyer for cash. As part of the deal, the seller agrees ...
  3. Investing

    Behind U.S. Equities' Declining Buybacks and Dividend Payments

    Learn what a decline in share repurchases and dividend payouts by corporations means for equity markets, and whether it is a cause for long-term concern.
  4. Markets

    The Share Buyback Report: The Industrials Sector (GE, MMM)

    Analyze share repurchase data for the industrials sector to identify factors that are driving trends over time and buybacks by companies in the sector.
  5. Investing

    Wal-Mart's Share Repurchase Isn't All Good

    Wal-Mart announced huge internal investments along with an aggressive share repurchase program that isn't as good as it initially sounds.
  6. Investing

    Impact of Share Repurchases

    Share repurchases can have a significant positive impact on an investor’s portfolio and are a great way to build investor wealth over time.
  7. Personal Finance

    The Share Buyback Report: The Consumer Discretionary Sector (XLY)

    Analyze historical share repurchase data for the discretionary sector and identify the financial and economic factors that drive buybacks over time and by company.
  8. Investing

    The Share Buyback Report: The Financial Sector

    Examine historical buyback data from the financial sector to determine which quarters and companies contributed the most to repurchase activity.
  9. Markets

    The Share Buyback Report: The Telecom Sector (T, VZ)

    Examine telecommunications sector share repurchase data to identify which companies and catalysts drove buyback trends between 2006 and 2015.
  10. Investing

    The Share Buyback Report: The Energy Sector (XOM, CVX)

    Examine historical share repurchase data for the energy sector. Review buyback activity over time, and find out which companies return the most capital to shareholders.
RELATED FAQS
  1. Under what circumstances would someone enter into a repurchase agreement?

    Learn when investors want to enter into a repurchase agreement, such as to gain quick access to liquidity and enjoy flexibility ... Read Answer >>
  2. What tax implications are there for parties involved with a reverse repurchase agreement?

    Learn about the tax consequences that the buyer can face as a result of a reverse repurchase agreement ("reverse repo") with ... Read Answer >>
  3. What is the primary use of reverse repurchase agreements?

    Discover how the Federal Reserve utilizes reverse purchase agreements for the primary purpose of offsetting temporary shifts ... Read Answer >>
  4. What is the difference between a repurchase agreement and reverse repurchase agreement?

    Learn how a repurchase agreement is a form of collateralized lending and a reverse repurchase agreement is a form of collateralized ... Read Answer >>
  5. What risks does the dealer (lender) in a reverse repurchase agreement take on?

    Read about the lender risks of participating in reverse repurchase agreements or for dealers who use the Fed's overnight ... Read Answer >>
  6. What is each party's role in a reverse repurchase agreement?

    Learn about the role of each party in a reverse repurchase agreement transaction, and find out why it's different if the ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center