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Unformatted text preview: l institutions that need specific securities to cover a short sale or a customers failure to deliver securities sold. Securities custodians or other agents commonly carry out securities lending activities on behalf of clients. >> Repurchase Agreements 0519 Government securities dealers, banks, other financial institutions, and corporate investors commonly use repurchase agreements to obtain or use short-term funds. Under those agreements, the transferor (repo party) transfers a security to a transferee (repo counterparty or reverse party) in exchange for cash and concurrently agrees to reacquire that security at a future date for an amount equal to the cash exchanged plus a stipulated interest factor. Instead of cash, other securities or letters of credit sometimes are exchanged. Some repurchase agreements call for repurchase of securities that need not be identical to the securities transferred...
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This note was uploaded on 01/20/2013 for the course ACCOUNTING 301 taught by Professor Gramlich during the Fall '11 term at University of Southern Maine.
- Fall '11