Exam IV: reverse repo

[Anonymous]

In Orange County case, the portfolio manager leveraged the portfolio by entering into “reverse repurchase agreements which allowed him to use securities…in the portfolio as collateral for further borrowings” (p. 2, middle column).

Is this incorrect or am I totally lost? I believe you can use repurchase agreements to leverage your portfolio, not *reverse* repos. In repo, you give the asset and buy it back at a higher price. For your counterparty, this would be a reverse repo. But the counterparty is not leveraging in this deal.

[Author]

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