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Finance Dictionary and Glossary of Investment Terms
reverse repurchase agreement
A purchase of securities with an agreement to resell them at a higher price at a specific future date. This is a way to borrow money and allow the securities to be held as collateral. Reverse repos occur most often in government securities, and often also in other securities that are highly valued and thus considered a good source of collateral.
The purchase of securities with the agreement to sell them at a higher price at a specific future date.For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement.