CFA Practice Question

CFA Practice Question

Which of the following is most likely incorrect?
A. Repurchase Agreements is a loan in which the institution sells a security (which acts like a collateral) while committing to repurchase the same security at a later date.
B. The repo rate is close to the Fed Funds rate.
C. Call money rate is the rate at which banks lend money to investors for investing in margin accounts.
Explanation: Call money rate is the rate at which banks lend money to brokers who lend to investors for investing in margin accounts. Investors themselves actually cannot avail of the call money rate. The repo rate is close to the Fed Funds rate as the collateral provided makes the risk low.

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