Answer: Repo market

## Explanation During the lead-up to the 2007/2009 financial crisis, Lehman Brothers relied heavily on the **repo market** as its main source of funding. ### Key Points: - **Repo Market**: Repurchase agreements (repos) were extensively used by Lehman Brothers for short-term financing - **Leverage Strategy**: Lehman employed significant leverage, with repo financing being a key component - **Risk Exposure**: This reliance on short-term repo funding created substantial liquidity risk - **Crisis Impact**: When the repo market froze during the crisis, Lehman lost access to this crucial funding source, contributing to its collapse ### Why not the other options: - **Bond Market**: While Lehman did issue bonds, this was not their primary funding source - **Stock Sale**: Equity issuance was not the main funding mechanism for their leveraged operations The repo market dependency was a critical vulnerability that became apparent during the financial crisis when counterparties became unwilling to roll over Lehman's repo positions.

Author: Tanishq Prabhu