Which One of the Following Statements Is True of Repurchase

question 42

Multiple Choice

Which one of the following statements is true of repurchase agreements?

• A) Their initial maturity is greater than 1 year.
• B) They are an unsecured form of borrowing.
• C) U.S. Treasury securities serve as their collateral.
• D) They make explicit, rather than implicit, interest payments.

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Definitions:

Time Value

The concept that money available now is worth more than the identical sum in the future due to its potential earning capacity.

January Call

In finance, might refer to a call option that expires in January, allowing investors to purchase stock at a specified price within a given time frame.

Pure Discount Debt

Pure discount debt refers to a form of debt instrument that is sold at a discount to its face value and does not pay interest, with the face value repaid at maturity.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically represented by the yield on government bonds.