What is the term repo?

The deadline is the redemption agreements that are structured to apply for a certain period of time. The only provision of time associated with the term repo is that the period must be more than one calendar day. It is not uncommon for the Repo term to be used in an environment as the cash market or the capital market.

The term repo works in a way that is very similar to any type of backup agreement. The Seller basically agrees to the transfer of ownership of specific securities to the buyer in exchange for a specific amount of cash. In the agreement, it owns that the seller will buy the same assets from the buyer later for a larger amount of cash. In the event that the seller is unable to or reluctant to purchase securities for the specified date, it will take full control of assets and can offer them to other investors.

Athermine Repo usually sets the amount of cash required for back ODKUP one of two ways. Firstly, the amount of the back purchase may be the amount of the original sale plus a fixed amount and which is set in the terms of the agreement. Secondly, the amount of the return purchase can be calculated by adding the amount of the original sale and the specified percentage of the original amount. In both cases, the actual difference in cash is between the amount of the original sales and the amount payable to the redemption known as the report rate. Although there are other more complicated means to determine the amount of back purchase, the two are the most common.

For the duration of the term, the Seller is not able to use securities in any way. Only after the securities have been resolved by the fulfillment of the terms of the deadline, can the seller participate in any other activities with assets. In the event that the seller default under the re -conditions, the buyer becomes owner and may trade or stick to securities as he considered appropriate.