The maturity of which agreement is fixed by the contract and depends on the needs of the borrower and the willingness of the lender?
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A. B. C. D.D
The correct answer to the question is D. Repurchase Agreement.
A Repurchase Agreement, commonly known as a "repo", is a type of agreement where a party (usually a bank or other financial institution) sells securities to another party (usually a money market fund or other cash-rich investor) with an agreement to repurchase them at a specified time and price.
The maturity of a repo agreement is fixed by the contract and depends on the needs of the borrower and the willingness of the lender. The borrower, in this case, is the party selling the securities, while the lender is the party buying them. The maturity of a repo agreement can vary from overnight to several weeks or months, depending on the terms of the agreement.
The primary purpose of a repo agreement is to provide short-term funding to the borrower by using the securities as collateral. The lender is willing to provide the funding because they have a guarantee that they will receive their money back plus interest, which is typically higher than other short-term investment options.
In summary, a Repurchase Agreement is a type of agreement where a party sells securities to another party with an agreement to repurchase them at a specified time and price. The maturity of the agreement is fixed by the contract and depends on the needs of the borrower and the willingness of the lender.