Repo Is Said to Have "Double Indemnity" Due to the Creditworthiness

question 157

Multiple Choice

Repo is said to have "double indemnity" due to the creditworthiness of the counterparty and:

• A) A written legal agreement between the parties
• B) The oversight of the transaction by the custodian of the collateral
• C) The creditworthiness of the collateral
• D) The right of close-out and set-off in an event of default

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Definitions:

Residual Value

The estimated worth or salvage value of an asset at the end of its useful life.

Net Income

The total profit of a company after all expenses, including taxes and operational expenses, have been deducted from total revenue; essentially, it's the bottom line of the income statement.

Average Rate

A term often used in finance to describe the mean rate of return or the mean rate of interest over a specified period.

Fixed Asset

Fixed asset, also known as a non-current asset, is a long-term tangible piece of property or equipment that a firm owns and uses in its operations to generate income.