What is the definition of a Reverse Repo

A reverse repo is simply the other side of a repo agreement, i.e. purchasing assets at a given price with an agreement to sell them back at a higher price at some point in the future. The advantage of taking this side of the trade is that the firm gains capital (should it be required) and receives a profit for the risk they accept in purchasing the assets. Reverse repo and repo agreements are essential to the wholesale money markets.

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