A prudent reason to use reverse repurchase agreements is to:

Using reverse repurchase agreements (reverse repos) primarily serves the function of addressing liquidity needs without the necessity to liquidate securities. When an entity engages in a reverse repo, it sells securities to another party with the agreement to repurchase them at a later date. This allows the seller to receive immediate cash while still retaining ownership of the securities, which can be crucial during times when cash flow is temporarily tight.

By opting to use reverse repos, entities can ensure they have the necessary liquidity to meet short-term cash requirements, such as covering unexpected expenses or fulfilling obligations, while avoiding the potential costs or market impacts associated with selling investments.

The other options, while reflective of various investment strategies, do not align as closely with the primary utility of reverse repurchase agreements. Enhancing portfolio returns through leverage could involve increasing risk and is typically not the main intent behind using reverse repos. Similarly, diversifying investments involves broadening the type of assets held, which is not a direct outcome of utilizing reverse repos. Lastly, avoiding arbitrage calculations is not a primary function of reverse repos; these agreements typically do not relate to the complexities associated with arbitrage strategies.