The Sale and Repurchase Agreement (SRA), Is a Transaction in Which

question 143

Multiple Choice

The Sale and Repurchase Agreement (SRA) , is a transaction in which:

• A)the Bank of Canada offers to sell government securities with an agreement to buy them back at a predetermined price the next business day.
• B)the Bank of Canada offers to sell government securities with an agreement to buy them back at a predetermined price the next year.
• C)the Bank of Canada offers to buy government securities with an agreement to sell them back at a predetermined price the next business day.
• D)the Bank of Canada offers to buy government securities with an agreement to sell them back at a predetermined price the next month.

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Definitions:

Small Banks

Financial institutions with a smaller asset base and local focus providing banking services to individuals and businesses in their communities.

Primary Reserves

Funds that financial institutions must hold in physical form, such as cash in vaults or deposits with central banks, as a measure of liquidity and financial stability.

Secondary Reserves

Liquid assets held by financial institutions as backup funds for unforeseen needs, not directly utilized in lending or investment.

Required Reserves

The minimum amount of funds that banks are required to hold in reserve against deposits, as mandated by central banks.