The securities repurchased have the same stated interest rate as, and maturities similar to, the securities sold and are generally priced to result in substantially the same yield is known as:
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A. B. C. D.C
The answer to this question is C. Fixed-coupon agreement.
A fixed-coupon agreement, also known as a "repurchase agreement" or "repo," is a financial transaction where one party sells securities to another party and agrees to buy them back at a later date for a set price, which includes the sale price plus interest. The interest rate is usually fixed and predetermined, hence the name "fixed-coupon."
In a fixed-coupon agreement, the securities repurchased have the same stated interest rate as the securities sold and similar maturities. This means that the securities sold and repurchased have similar yields, which are generally priced to result in substantially the same yield. Therefore, the parties involved in the transaction can essentially lock in a certain rate of return for a specific period.
Yield-maintenance agreements and variable-coupon agreements are not the correct answers to this question. A yield-maintenance agreement is a provision in a loan agreement that requires the borrower to pay a penalty fee if they pay off the loan early or refinance it. A variable-coupon agreement is a financial contract where the coupon rate paid on the security varies based on a predetermined formula or benchmark.
In summary, a fixed-coupon agreement is a financial transaction where one party sells securities to another party and agrees to buy them back at a later date for a set price, which includes a fixed interest rate. The securities repurchased have the same stated interest rate as the securities sold and similar maturities, resulting in substantially the same yield.