Hello there,I have a question about the HF's repo and reverserepo.transactions. I have not understood what are the exact cash flows arein those two transactions.Is it correct to say that the seller in a repo transaction holdspractically a long position and that if somebody wants to take a shortposition this can be done through a reverse repo? The seller pays the reporate, does the counterpart receive the reverse repo rate? Does the buyerreceive what the seller pays? If this was true, the repo rate should beequal to the reverse repo rate which from what I got from the notes does nothold? To put it shortly, please confirm what kind of exposure (long orshort) do we have in case of a repo or a reverse repo. Who pays or receivesthe repo and reverse repo rates in each case?The FI arbitrageur pays the repo - reverse repo difference, why is not the specialness difference added to the total carry return? I wold think that it is an inflow since it reduces what the repo rate which is what the arbitrageur pays.Can anyone explain this to me ?thanks a lot in advance.

I think you need to understand what a repo transaction is first.

Dear Martinghoul,Thanks for your kind reply. I have searched the definition for the repo transaction, however for a HF as the lender (buyer), it's still not so clear for me what is the cash flow during its transactions...

Why do you care if the counterparty is an HF?

Wikipedia Repos