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Repurchase agreements, known as repos, are essential funding sources for banks and market participants. A repo involves one party selling a security to another with a commitment to repurchase it later at a specified price. The buyer essentially lends funds to the seller with the security as collateral. The seller must pay the lender the repurchase price on the repurchase date to retrieve the collateral. Repos can be overnight or for a longer term, with the repurchase price higher than the selling price due to interest charges. The annualized percentage difference between these prices is the repo rate. Repos are popular for their lower interest costs compared to bank loans.