Two trustees of a pension fund are discussing repurchase agreements. Trustee A told Trustee B that she feels it is a safe short-term investment for the fund. Trustee B told Trustee A that repurchase agreements are highly speculative vehi- cles because they are leveraged instruments. You've been called in by the trustees to clarify the investment characteristics of repurchase agreements. What would you say to the trustees?

AppendixLO1