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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 to another with a commitment to repurchase it later at a specified price, acting as a lender temporarily. The borrower repays the lender on the repurchase date to regain the collateral. Repos can be overnight or for a longer term, with the repurchase price exceeding the selling price to cover interest charges, known as the repo rate. This is typically lower than bank loan rates, making repos a popular financing choice.