What's a Repo?

Article Abstract:

Securities dealers are the major borrowers in repurchase agreements (or repos). This is because it's the cheapest form of financing. In a simple repo, the party sells a security to another and agrees to repurchase it at a later date. The first party, the borrower, gets cash and the second party, the lender, earns a return equal to the difference between the price at which he buys the security and the price at which he resells it. To finance their operations, dealers borrow against their inventories of securities. Federal officials are concerned because repos permit extremely high leverage in government securities. Extremely high profits can be generated when prices rise, but devastating losses can be generated when prices fall.

Redemption (Law)

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...Wings Over the Euromarket

Article Abstract:

The brokerage firm of Phibro-Salomon has introduced a new type of government securities, which they call warrants for negotiable government securities (WINGS). Such securities had been offered in the Eurobond market once before but that offering had been a failure. WINGs have been very popular with European investors, however, Europeans can use WINGs to invest in United States bonds at very little risk. In addition, Europeans are more accustomed to buying warrants, such as WINGs, than to buying calls.

Europe, Securities, Bonds, Bonds (Securities), Eurobond market

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Gap Shrinks Between Bond, Equity Funds

Article Abstract:

Fixed-income funds out-performed equity funds during the fourth quarter of 1983. Fixed-income funds returned a total of 1.2990 compared to a net loss of 1.9070 with stock funds. Bond funds returned a yearly total of 9.9990. IDS Investors Selective Fund was the top performer fixed-income fund. Their tactic was to shift to higher- yielding, medium-grade corporate bonds, in the fourth quarter. They are also using financial futures to hedge its portfolio.

Management, Finance, Accounting and auditing, Investments, Fixed income securities

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