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Repurchase agreements, or repos, are vital for funding in the financial market. In a repo, one party sells a security with a commitment to repurchase it later at a set price, acting as a loan with collateral. The repurchase price is higher than the selling price, accounting for interest charges in the repo rate, the percentage difference between the prices. Repos are preferred due to lower interest costs compared to bank loans, with overnight and term repos available for different durations.