1

repo

adjective re·po \ ˈrē-ˌpō \
Updated on: 15 Nov 2017

Definition of repo

:of, relating to, or being in the business of repossessing property (such as a car) from buyers who have defaulted on payments
  • a repo company

Recent Examples of repo from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'repo.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of repo

short for repossession


2

repo

noun

Definition of repo

plural repos

Recent Examples of repo from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'repo.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of repo

by shortening & alteration


Financial Definition of REPO

repo

What It Is

A repurchase agreement is the sale of a security combined with an agreement to repurchase the same security at a higher price at a future date.  It is also referred to as a "repo."

How It Works

For example, trader A may sell a specific security to trader B for a set price and agree to buy back the security for a specified amount at a later date.  In actuality, however, the sale is not a real sale, but rather a loan, secured by the security.  As with collateralized loans, the security being used as collateral is "held" by trader B (in case trader A defaults and does not repayment the amount to trader A.)  The incremental amount to be repaid by trader A to repurchase the security is the amount of "interest" earned on the loan by trader B.

Repos are usually very short term transactions, mostly with overnight terms although some extend for a period of years.  For short term repos, the risks are very low.  For longer long repos, with the possibility of fluctuations in the market, collateral risk is much higher.

Why It Matters

Repurchase agreements have grown into a very large portion of the money markets, fueling the growth of short-term markets for mutual funds in trading government-backed securities, such as T-bills. Indeed, the Treasury, through its Federal Reserve bank banking system, is a large purchaser of repos, providing important liquidity for short-term market traders.



REPO Defined for English Language Learners

repo

adjective

Definition of repo for English Language Learners

  • : of or relating to the business of taking property from people who have stopped making the payments that they agreed to make to pay for it


Law Dictionary

repo

noun re·po \ ˈrē-ˌpō \

legal Definition of repo

plural repos

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