Simple English definitions for legal terms
Read a random definition: dog-bite statute
Repurchase price: The amount of money that someone must pay to buy back something they previously sold or redeemed. This is also known as the redemption price.
Definition: The repurchase price is the amount of money that an issuer of a security agrees to pay to buy back the security from the investor. It is also known as the redemption price.
Example: Let's say an investor bought a bond with a face value of $1,000 and a maturity date of 10 years. The issuer of the bond may offer to repurchase the bond from the investor before the maturity date at a repurchase price of $1,050. This means that the investor will receive $1,050 from the issuer if they decide to sell the bond back to them.
Explanation: The example illustrates how the repurchase price works in the context of a bond. The issuer of the bond agrees to buy back the bond from the investor at a price that is higher than the face value of the bond. This is because the issuer wants to incentivize the investor to sell the bond back to them before the maturity date. The repurchase price is important for investors because it allows them to calculate their potential returns if they decide to sell the security back to the issuer.