Financial Risk Manager Part 1
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What is a key difference between a dollar roll transaction and a traditional repurchase agreement (repo)?
A
In a dollar roll, the initiating party sells securities and agrees to buy them back at a higher price, similar to a repo.
B
Dollar rolls involve the exchange of securities with the same characteristics between parties.
C
Dollar rolls may involve receiving different securities in the second month, unlike repos where the same securities are repurchased.
D
Dollar roll transactions add interest to the repurchase price, unlike repos where interest is not considered.