Repo

a loan against securities with a buyback; the securities stay on the balance sheet

In more detail

A loan against securities as collateral, documented as a sale with an obligation to buy back. Legally a sale, economically a loan.

It was invented to lend to someone you do not trust on their word: if they do not repay, you keep the security. That is why such money is cheaper than unsecured money.

Covered in the primer of chapter 4.

Where it appears in the course

In the academy “Repo” is not a definition but an operation: you post it yourself and watch what it does to the balance sheet.

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