Please help me aswer this question. Thank you so much!! X) one day after. Therefore, this buy and sell it back at higher price is just like lendingwith a collateral (the asset being exchanged)....

Please help me aswer this question. Thank you so much!!

Extracted text: Q2. (Repo and Financial Statements) Repo is a contract where a buyer buys an asset at X and sell it back to its seller at Y (Y>X) one day after. Therefore, this buy and sell it back at higher price is just like lending with a collateral (the asset being exchanged). Suppose that there is a bank that holds huge amount of risky bonds in its portfolio. Tomorrow, the bank has to report its financial statements to the public but the amount of risky bonds the bank currently holds is against the regulation on bank risk management. What the CEO of the bank chose to do is to initiate a large-scale repo contract and sell the risky bonds overnight and remove it from its balance sheet. When the reporting process is done, the bank will buy back those bonds. Do you think this is ethical? Based on this case, do you think when a firm engages in repo, we have to consider it as independent selling and buying back or lending with collateral? (The former means adjustments in total assets, the latter does not mean changes in total assets in general).