Homonym: Repo (Repossess)
A "Repo," short for repurchase agreement, is a financial transaction where one party sells an asset, usually government securities, to another party with the agreement to repurchase it later at a higher price. This arrangement allows the seller to obtain short-term funding while providing the buyer with a low-risk investment.
Repos are commonly used by banks and financial institutions to manage liquidity and meet short-term cash needs. They play a crucial role in the money market, helping to stabilize interest rates and ensure that there is enough cash flow in the financial system.