Answer: sale of a security with an agreement by the seller to buy it back at a specified price.

## Explanation A **repo** (repurchase agreement) is correctly defined as: **"C. sale of a security with an agreement by the seller to buy it back at a specified price."** ### Key Points: 1. **Repo Structure**: In a repo transaction, one party sells securities to another party with a simultaneous agreement to repurchase them at a later date at a specified price. 2. **Economic Function**: Repos are essentially collateralized short-term loans. The seller (borrower) receives cash, and the buyer (lender) receives securities as collateral. 3. **Why Other Options Are Incorrect**: - **Option A**: Repos are not "publicly traded" securities in the traditional sense. While they are traded in financial markets, they are typically bilateral agreements rather than standardized publicly traded securities. - **Option B**: This describes a "putable bond" or security with a put option, not a repo agreement. 4. **Repo Market Characteristics**: - Commonly used by financial institutions for short-term funding - Typically involve government securities as collateral - Have maturities ranging from overnight to several months - The difference between the sale price and repurchase price represents the interest (repo rate) 5. **Reverse Repo**: The opposite transaction is called a "reverse repo," where one party buys securities with an agreement to sell them back. This definition aligns with standard fixed income terminology and CFA curriculum content on money market instruments.

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