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Question
Repurchase agreements (repos) are used extensively to finance security holdings. In 2007, many investment banks and other financial institutions were unable to roll over their maturing repurchase agreements during the subprime mortgage crisis. This inability to get new repo financing is an example of
A. credit risk.
B. liquidity risk.
C. sovereign risk.
D. technological risk.
E. operational risk.
Answer
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Related questions
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Explain how liquidity risk can lead to insolvency risk.
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