3. Todays price of a 3-month t-bill futures is 958500. Today, the spot price of a 6-month t-bill is $940000. What is the implied repo rate?

4. In addition to the information in the above problem, assume a trader can actually borrow at a repo rate of 6% p.a. Show how this trader can arbitrage the disequilibrium profit using the implied repo rate method.

5. Today is Nov 3, 2010. A trader with a short t-bond futures position intends to announce his intention of delivery. Given the following 3 t-bonds in the spot market, determine which bond is the cheapest to deliver. Assume zero accrued interest, and face value of t-bond is 100000. Today settlement price of the t-bond futures is 96-16.

Maturity	Bond	Spot Price	Conversion Factor
2026	A	103-16	1. 15
2024	B	93-08	1.20
2027	C	118-00	1.10