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Aug 6th, 2022
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How to Correct text in the Repurchase Agreement

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Lets say that youre in desperate need of money and I have money to lend to other people. So this is me and this is my gold chain. So you come to me and say, Sal, I need $10,000 for a kidney transplant. Can you lend me the money? Im in desperate need. And I have $10,000. Sure, Im willing to lend it to you, but its a tough economy and you never know where that moneys going to go and I dont know if youre going to be able to keep your job after going through this kidney surgery and all that. So Im very careful with my money so I want to make sure that youre good for it. So we think about it a little bit and I say, hey, that watch you have on your wrist, that looks pretty nice. You say, this watch? Let me draw the watch. And I say, yeah, that watch. Youre like, this watch I got from my great-great-grandfather and its actually worth-- I dont know-- maybe its a diamond studded Rolex of some sort and its actually worth $30,000, right? And I know that, clearly because Ive alrea

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In order to make it clear to the reader of a balance sheet which assets have been sold in repos, the International Financial Reporting Standards (IFRS) require that securities out on repo are reclassified on the balance sheet from investments to collateral and are balanced by a specific collateralised borrowing
Repo Rate Formula Where: Repurchase Price Original Selling Price + Interest. Original Selling Price Sales Price of Security.
A repurchase agreement (repo) is a short-term secured loan: one party sells securities to another and agrees to repurchase those securities later at a higher price. The securities serve as collateral.
The repurchase agreement involves the purchase of an asset that is held as collateral until it is resold to the counter-party at a premium.
Explanation. From the above definition, it is apparent that the following term correctly describes a repurchase agreement: a. The sale of a security with a commitment to repurchase the same security at a specified future date and a designated price.
When valuing securities, the purchased securities are valued using their current market price plus accrued interest to compute their total value. The total value is then compared to the repo value multiplied by any margin percentage.
In a repurchase agreement, the possession is temporarily transferred to the lender, whereas the ownership still remains with the borrower. They are short term transactions that facilitate short term capital. In most cases, the underlying security is the U.S Treasury Bonds.
For regulatory reporting purposes, a repurchase agreement is not accounted for as a sale, even though the confirmation sent to the contra-party will read that the transaction is a sale subject to an agreement to repurchase the same or substantially identical securities.

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