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Bank A needs cash quickly and owns bonds, while Bank B has excess cash and wants to invest it. A repurchase agreement, or repo, is where Bank A sells its bonds to Bank B with the agreement to buy them back at a higher price later. This allows Bank A to get the cash it needs and Bank B to make a profit. This transaction is known as a repo for Bank A and a reverse repo for Bank B. Repo transactions are common among banks, mutual funds, hedge funds, and even central banks.