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A dealer forecasts that the discount rate on a 60-day bill, thirty days from now, will be 4.80%. The current discount rate on a 90-day

A dealer forecasts that the discount rate on a 60-day bill, thirty days from now, will be 4.80%. The current discount rate on a 90-day bill is also 4.80%.  The dealer is thinking about repoing the 90-day bill. 


What is the highest 30-day repo rate the dealer can afford to pay and still expect to break even? Explain.

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To break even the dealer needs to earn the same amount of interest from repoing the 90day bill ... blur-text-image

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