A Repurchase Agreement Is

question 103

Multiple Choice

A repurchase agreement is:

• A) an asset that represents the value of all collateral repossessed by the bank and held for sale.
• B) a long-term collateralized loan.
• C) an agreement where the parties agree to reverse the transaction on a specific day.
• D) only made between two or more banks.

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Definitions:

Cash Cycle

The period of time it takes for a company to convert its investments in inventory back into cash, reflecting how efficiently a company manages its assets.

Credit Terms

Credit terms are the conditions under which a seller extends credit to a buyer, specifying the repayment period, discount for early payment, and applicable interest charges.

Liberal Credit Terms

Credit conditions that are more favorable to the borrower, such as longer repayment periods or lower interest rates.