Answers after watching documentary
Answers
1. Repo 105 is usually consider and use for purpose of change possession in future. As someone purchase asset on agreement to seller buyback on future specified date on specified price. It is due to hedge future risks. In case market value of asset decline in future, buyer purchase to resell the seller by agreement.
2. As itself repo is not fraud, Lehman brothers avail repo in sense debt. And Lehman Brothers normally hide its debt. In this case other institutions don’t have idea for heavy debt already taken by Lehman brothers. This hedge technique help Lehman to hide his bad assets and overstate his sales when resell heavy amount repo on future date.
MCQs
4.b
5.c
6.c
7.d
8.b
9.c
10.b
11.a
12.b