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AGA CGFM Exam - Topic 4 Question 65 Discussion

A state transfers cagh to a broker and the broker transfers securities to the state, promising to repay the cash plusinterest in exchange for the return of the same securities. This transaction is an example of
A) an arbitrage agreement.
B) a repurchase agreement.
C) a mutual buy-sell agreement.
D) a reverse repurchase agreement.
U) S. Department of the Treasury, Guide to Federal Investments. Financial Accounting Standards Board (FASB), Accounting for Repurchase Agreements.

AGA CGFM Exam - Topic 4 Question 65 Discussion

Actual exam question for AGA's CGFM exam
Question #: 65
Topic #: 4
[All CGFM Questions]

A state transfers cagh to a broker and the broker transfers securities to the state, promising to repay the cash plus

interest in exchange for the return of the same securities. This transaction is an example of

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Suggested Answer: A

by Felix at Jan 23, 2025, 02:50 AM

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Lacey
7 months ago
Yup, cash for securities and interest—definitely a repurchase!
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Mariann
8 months ago
Wait, are we sure about this? Seems a bit off.
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Jettie
8 months ago
Sounds like a classic repo to me!
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Ming
8 months ago
I thought it was a reverse repurchase agreement?
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Marylin
8 months ago
This is definitely a repurchase agreement!
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William
9 months ago
I'm a bit confused; could this also be considered an arbitrage agreement? I need to double-check the definitions.
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Merissa
9 months ago
I feel like I've seen a question like this before, and it was definitely about repurchase agreements.
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Genevieve
9 months ago
I remember something about reverse repurchase agreements, but this seems more like a standard repurchase agreement to me.
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Royal
9 months ago
I think this might be a repurchase agreement, but I'm not entirely sure. We covered similar examples in class.
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Ellen
9 months ago
Okay, let me break this down step-by-step. The state transfers cash to the broker, the broker transfers securities, and they agree the broker will repay the cash plus interest to get the securities back. That sounds like a repurchase agreement to me, so I'll go with option B.
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Lilli
9 months ago
Ah, I recognize this type of transaction. It's a repurchase agreement, where the state is essentially lending cash to the broker in exchange for securities as collateral. The broker agrees to repurchase the same securities later, repaying the cash plus interest. Option B is the correct answer here.
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Carma
9 months ago
Hmm, I'm a bit confused by this one. Is it asking about a specific type of financial transaction? The details seem relevant, but I'm not totally sure which option best fits the description. I'll have to think this through carefully.
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Arminda
9 months ago
This looks like a straightforward repurchase agreement question. I'll focus on understanding the key details - the state transfers cash to the broker, the broker transfers securities, and they agree to repay the cash plus interest in exchange for the return of the same securities. The answer is clearly B.
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Adolph
1 year ago
Hey, at least they're not asking about derivatives this time. I'd be completely lost in that financial maze!
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Latrice
1 year ago
C: D) a reverse repurchase agreement.
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Barney
1 year ago
B: Yeah, derivatives can get pretty complicated.
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Mayra
1 year ago
A: B) a repurchase agreement.
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Irma
1 year ago
I can't believe they're asking about repurchase agreements on this exam. It's like they're trying to trip us up with all these financial jargon! But I'm going to go with B) because it sounds the most like what's described.
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Lavonda
1 year ago
Yeah, B) seems like the most logical option based on the scenario.
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Almeta
1 year ago
I think B) is the best choice too, it matches the description given.
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Nguyet
1 year ago
I agree, these questions can be tricky with all the technical terms.
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Theodora
1 year ago
I think you're onto something with D), it does sound like a reverse repurchase agreement. Let's see what the correct answer is.
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Thurman
1 year ago
I'm not sure, but maybe it's D) instead? It sounds like it could be a reverse repurchase agreement.
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Nan
1 year ago
I agree, these questions can be tricky. But I think you're right, B) seems like the best choice.
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Ressie
1 year ago
I'm not sure, but I think it could also be D) a reverse repurchase agreement, where the broker sells securities to the state with an agreement to repurchase them later.
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Allene
1 year ago
This is a tricky one! I was tempted to go with A) an arbitrage agreement, but the mention of the state transferring cash and the broker transferring securities makes me think B) a repurchase agreement is the correct answer.
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Vincent
1 year ago
Exactly, it's a common practice in the financial markets.
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Honey
1 year ago
So, it's like a short-term loan with securities as collateral.
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Kiley
1 year ago
I agree, it involves the transfer of securities for cash with a promise to repurchase.
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Carma
1 year ago
I think B) a repurchase agreement is the right choice.
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Amber
1 year ago
I agree with Rochell, because in a repurchase agreement, securities are sold with a commitment to repurchase them at a later date.
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Tran
1 year ago
Hmm, I'm not sure about this one. The wording is a bit confusing, but I'm leaning towards D) a reverse repurchase agreement. Isn't that when the broker sells securities to the state and promises to buy them back?
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Raylene
1 year ago
Reverse repurchase agreement seems to be the most fitting option here, given the context of the transaction.
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Luisa
1 year ago
I agree, it definitely sounds like a reverse repurchase agreement based on the scenario.
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Chana
1 year ago
Yeah, that makes sense. The broker selling securities and promising to buy them back matches the description.
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Valentine
1 year ago
I think you're right, it does sound like a reverse repurchase agreement.
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Kenda
1 year ago
I think the answer is B) a repurchase agreement. The description matches the definition of a repo, where the state sells securities to the broker and agrees to buy them back later with interest.
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Rochell
1 year ago
I think the answer is B) a repurchase agreement.
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