Question

A repo is in essence a collateralized Select one: a. Banker’s acceptance b. Fed funds loan...

A repo is in essence a collateralized

Select one:
a. Banker’s acceptance
b. Fed funds loan
c. Certificate of deposit
d. Commercial paper loan
e. None of the above
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Answer #1

Correct answer is Option B - Fed funds loan.

A repo is in essence a collateralized Fed funds loan.

Banker's acceptance is a short term commercial bank draft which the bank has to pay a specified amount to the holder of this instrument. it is also known as Bill of exchange.

Certificate of deposit is a short term security issued by a bank with a fixed interest rate.

Commercial paper loan is a short term debt instrument with a fixed maturity.

Hence the answer to this question is Fed funds loan, All other given options are wrong.

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