Search results
Results from the WOW.Com Content Network
A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a form of short-term borrowing, mainly in government securities. The dealer sells the underlying security to investors and, by agreement between the two parties, buys them back shortly afterwards, usually the following day, at a slightly higher price.
Lower cost borrowers, with large balance sheets, are natural payers. Less common, but related, are the partial return swap and the partial return reverse swap agreements, which usually involve 50% of the return, or some other specified amount. Reverse swaps involve the sale of the asset with the seller then buying the returns, usually on equities.
In macroeconomics, an open market operation (OMO) is an activity by a central bank to exchange liquidity in its currency with a bank or a group of banks. The central bank can either transact government bonds and other financial assets in the open market or enter into a repurchase agreement or secured lending transaction with a commercial bank.
To determine the cheapest bond in a basket of deliverable bonds against a futures contract, implied repo rate is computed for each bond; the bond with the highest repo rate is the cheapest. It is the cheapest because it has the lowest initial value to yield a higher return provided it is delivered with the stated futures price.
Repurchase agreements (repos) are yet another source of funding. Repos and reverse repos are transactions in which a borrower agrees to sell securities to a lender and then to repurchase the same or similar securities after a specified time, at a given price, and including interest at an agreed-upon rate.
A debate has emerged online (based on this article in The Wall Street Journal) about the financial the instrument known as a reverse convertible bond. A regular convertible bond pays the owner ...
The Fed’s facility offers what are called reverse repos, which allow eligible firms to park cash at the central bank in exchange for a risk-free return. The rule playing a role in the inflows is ...
In finance, a haircut is the difference between the current market value of an asset and the value ascribed to that asset for purposes of calculating regulatory capital or loan collateral. The amount of the haircut reflects the perceived risk of the asset falling in value in an immediate cash sale or liquidation.