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Bank A needs cash quickly and has bonds it can leverage, while Bank B has excess cash and seeks investment opportunities. To meet this need, Bank A engages in a repurchase agreement (repo) with Bank B. In this arrangement, Bank A (the dealer) sells its bonds to Bank B and agrees to repurchase them the next day at a higher price, thus obtaining the necessary cash. For Bank A, this transaction is a repo, while for Bank B, it is a reverse repo, as Bank B intends to sell the securities back at a profit later. Repo transactions are options utilized by various entities, including banks, mutual funds, hedge funds, and central banks.