Question

Income payments on repo collateral securities held at the FRB are paid to the:

a. issuer
b. custodian
c. holder of record
d. beneficial owner

Answer 1

Income payments on repo collateral securities held at the FRB are paid to the beneficial owner. Option d

Step-by-step explanation:

The income payments on repo collateral securities held at the Federal Reserve Bank (FRB) are paid to the beneficial owner of the securities.

When a financial institution engages in a repurchase agreement (repo), it temporarily sells its securities to the FRB and agrees to repurchase them at a future date at a slightly higher price. The beneficial owner of the securities is the entity that owns and is entitled to receive the income payments from the securities, even if they are temporarily held by the FRB.

For example, if a bank holds government bonds as collateral for a repo with the FRB, the interest payments on those bonds would be paid to the bank as the beneficial owner of the bonds. Option d