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Repurchase agreements, or repos, are crucial sources of funding for banks and other market players. In a repo, one party sells a security to another with a commitment to repurchase it at a later date at a specified price. The buyer essentially lends funds to the seller with the security as collateral. The repurchase price exceeds the selling price, including interest charges. The implied interest rate, known as the repo rate, is the annualized percentage difference between the two prices. Overnight repos last one day, while term repos cover longer periods. Repurchase agreements are favored due to their lower interest costs compared to bank loans.