Question

Repo margin is the difference between the market value of the security used as collateral and the value of the loan.

a) True
b) False

Answer 1

Repo margin is the difference between the loan value and the market value of the security used as collateral.

Step-by-step explanation:

False. Repo margin is the difference between the loan value and the market value of the security used as collateral. It is the amount by which the value of the collateral exceeds the value of the loan. For example, if the market value of the collateral is $10,000 and the loan value is $8,000, the repo margin would be $2,000.