What Is the Primary Function of GC Repo, Particularly Very

question 2

Multiple Choice

What is the primary function of GC repo, particularly very short -term transactions?

• A) Financing long positions
• B) Covering short positions
• C) Interest rate positioning
• D) Dividend tax arbitrage

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Definitions:

Preferred Stock

A type of stock that typically pays fixed dividends and has priority over common stock in dividend payments and asset liquidation.

Perpetuity

A type of financial annuity that generates an infinite series of equal payments over an indefinable period of time.

Dividends

Cash payouts made by a corporation to its equity holders, usually stemming from the corporate profits.

Discount Rate

The interest rate used to discount future cash flows to their present value, essentially reflecting the opportunity cost of capital.