CFA Practice Question

There are 490 practice questions for this study session.

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 ______.

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
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