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Repurchase agreements, or repos, are vital funding sources for banks and market participants. In a repo, one party sells a security with a commitment to repurchase it at a later date at a specified price. The buyer effectively lends funds to the seller with the security as collateral. Repurchase price is higher than the selling price and includes the interest charged by the buyer, known as the repo rate. Repos are favored due to lower interest costs compared to bank loans. Overnight repos last a day, while term repos cover longer periods. Seller must pay repurchase price to reclaim collateral.