Repurchase agreements (repos) are not actual securities in themselves, but rather contracts to immediately acquire available funds by selling securities, together with a simultaneous agreement to repurchase those securities at a later date. Most repos are outstanding for only one business day, and nearly all involve Treasury or government agency securities. For example, suppose a company has $1 million in excess cash available for two days. Instead of buying T-bills and then selling them two days later, the company could create a repurchase agreement with a bank. The company would agree to purchase $1 million worth of T-bills and then sell them back to the bank after two days for the original $1 million plus two days of interest. No actual transfer of physical securities is made; rather, the entire transaction consists of bookkeeping entries on the two parties’ accounts. Repos offer two distinct advantages for investing short-term surplus cash. First, their maturities can be tailored to suit the exact times that the parties have funds available, from overnight to 30 days or more. Second, because repos state the selling price of the securities in the initial agreement between buyer and seller, they eliminate interest rate risk. The yields on repos are similar to, but slightly lower than, those of T-bills.