Agreement which incurs transaction between two parties and promise held that second party will sell security at specific maturity is classified as
A
repurchasing commercial notes
B
repurchase bills
C
purchase agreement
D
reverse repurchase agreement
Correct Answer: reverse repurchase agreement
Agreement which incurs transaction between two parties and promise held that second party will sell security at specific maturity is classified as reverse repurchase agreement. A reverse repurchase agreement, or "reverse repo", is the purchase of securities with the agreement to sell them at a higher price at a specific future date.