Which of the Following Statements Is True Regarding Repurchase Agreements

question 10

Multiple Choice

Which of the following statements is true regarding repurchase agreements?

• A)their maturity is greater than one year
• B)they are an unsecured form of borrowing
• C)treasury bills serve as their collateral
• D)they make explicit, rather than implicit, interest payments

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Definitions:

Risk-free Asset

A theoretical financial instrument that promises a certain return with no risk of financial loss, often exemplified by government bonds.

Positively Skewed

Describes a distribution of data where the right tail (higher values) is longer than the left, indicating that a variable has more values that are significantly higher than the mean.

Underestimates Risk

The situation where the potential for loss in investments or strategies is not fully recognized or assessed.

Standard Deviation

A statistical measure of the dispersion or variability in a set of data, often used in finance to gauge the volatility of an investment.