1A One year ago you took a one year long leveraged position in $1,000,000 of face value 10 year 6% annual coupon bond with a price of $100 using the repo market. The effective annual repo rate is 5%. Assume the required hair cut was 4%. At the end of the year you sell the bond which now has a 7% YTM. What is your cash flows at the beginning and end of the year?

B Calculate the one year return you earned on the cash you invested in part A above.