Question: Two trustees of a pension fund are discussing repurchase agreements
Two trustees of a pension fund are discussing repurchase agreements. Trustee A told Trustee B that she feels it is a safe short-term investment for the fund. Trustee B told Trustee A that repurchase agreements are highly speculative vehicles because they are leveraged instruments. You’ve been called in by the trustees to clarify the investment characteristics of repurchase agreements. What would you say to the trustees?
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