Sean Lee has just started work at D&L Dealers Association (DLD), a U.S. based firm that specializes in dealing in stocks and bonds. During a meeting with one of the firm’s colleagues, Lee posed the following question: “I am not sure how the lender of cash in a repurchase agreement would account for the credit risk of the counterparty and make sure it has a margin of safety?” The best response to Lee's question is that the