Repurchase Agreement Mechanics

This question practices basic capital markets knowledge and the ability to explain how short term secured funding works. A strong interview answer should describe the two sides of the transaction, who typically borrows and lends, what collateral is used, and why the arrangement is structured as a sale today with a committed buyback later. Interviewers ask this because repos are a core funding tool in fixed income markets, and candidates need to understand how securities, cash, and interest interact in a transaction that is common across dealer financing and money market activity.