repo agreement

A repo agreement, short for repurchase agreement, is a short-term loan where one party sells securities (like government bonds) to another with a promise to buy them back later at a higher price. Essentially, it's a way for institutions to quickly raise cash or lend money, using securities as collateral. The difference in repurchase price reflects the interest or fee for the loan. Repos are commonly used in financial markets for liquidity management and are considered low-risk transactions because of the collateral backing.