2.You are given the following data on 8/24/2015 settlement date:

Maturity	Annual Coupon Rate	Bid Price	Asked Price
8/31/2017	1.875	102.4922	102.5078
8/15/2025	6.875	144.6719	144.6875

and the following data on 8/28/2015 settlement date:

Maturity	Annual Coupon Rate	Bid Price	Asked Price
8/31/2017	1.875	102.1875	102.2031
8/15/2025	6.875	142.4531	142.4688

a) On 8/24/2015, open a repo position using the 8/31/2017 maturity bond and close the position on 8/28/2015. Compute the profit/loss on this transaction.

b)On 8/24/2015, open a reverse repo position using the 8/15/2025 maturity bond and close the position on 8/28/2015. Compute the profit/loss on this transaction.

Use an annual repo rate of 1.0% and an annual reverse repo rate of 1.5%. Explain why you made a profit/loss in each of the above transactions. Also, make sure to account for accrued interest in your calculations and choose the bid or ask price appropriately. If you are using the Excel function for accrued interest, make up an Issue Date as the coupon payment date just prior to the settlement date