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In a repo agreement, Bank A, needing cash quickly, sells bonds to Bank B, which has excess cash. Bank A, the dealer, agrees to buy back the bonds at a later date, typically the next day, at a higher price. This transaction provides Bank A with the necessary cash while allowing Bank B to earn a profit. From Bank A's perspective, this operation is called a repurchase agreement (repo), while for Bank B, it is a reverse repo, buying securities with the intent to sell them back. Repo transactions are utilized by various entities, including banks, mutual funds, hedge funds, and even central banks, as a means of managing liquidity.