- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 4. Fixed-Income Markets for Corporate Issuers
- Subject 2. Repurchase Agreements
CFA Practice Question
A security dealer borrows funds at the call money rate to finance the holding of security inventory. This transaction is an example of ______.
B. a reverse repurchase agreement
C. margin buying
A. a term repurchase agreement
B. a reverse repurchase agreement
C. margin buying
Correct Answer: C
The rate charged to the borrower in a margin buying arrangement is known as the call money rate or the broker loan rate. It is not a repo!
User Contributed Comments 3
| User | Comment |
|---|---|
| kalps | call money rate - rate at which the broker will lend funds to a trader - always on the margin buying |
| Gina | the call money rate is the rate at which teh broker borrows funds from the bank. broker lends the money at the call money rate & surcharge. |
| khalifa92 | this is leveraged short position |