It means ‘Repurchase of securities”. In a repo transactions a bank avail itself of funds against the pledge of securities. Primarily it is a pledge transaction with the bank committing itself to buy back the security at a mutually agreed price after a specified period. This varies between 1 to 14 days. The difference between sale and buy back is the interest cost. The basic advantage of a repo is that a collateral security is offered to the lender eliminating the counter party risk.

The calculation of an average rate of return on a bond with a maturity period of one year and above. If it is held to its maturity date and if all cash flows are reinvested at the same rate of interest. It includes any adjustments for any premium paid or discount received. It is a calculation used to compare relative values of bonds.