CFA Practice Question

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CFA Practice Question

If an institutional investor wants to borrow money for 30 days to finance a bond purchase, which of these is most likely to be the lowest loan rate available?

A. Term repo rate
B. Call money rate
C. Broker loan rate
Correct Answer: A

For institutional investors the term repo rate is lower than the cost of bank financing (i.e., broker loan rate or call money rate.)

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