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Repurchase agreements, or repos, are a significant source of funding for banks and other market participants. In a repo, one party sells a security to another with the commitment to buy it back at a later date at a specified price. The buyer effectively lends funds to the seller with the security as collateral. There are overnight repos for one day and term repos for longer periods. The repurchase price is higher than the selling price, accounting for the interest charged by the buyer, known as the repo rate. Repos are favored because their interest cost is typically lower than bank loan rates.