Agreement which incurs transaction between two parties and promise held that second party will repurchase security at specific price is classified as

A. repurchasing commercial notes

B. repurchase bills

C. repurchase agreement

D. reverse repurchase agreement

Answer: Option C

Solution(By Examveda Team)

Agreement which incurs transaction between two parties and promise held that second party will repurchase security at specific price is classified as repurchase agreement. A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price.