A portfolio manager decided to purchase corporate bonds with a market value of 10 million. To finance 60 percent of the purchase, the portfolio manager entered into a 30-day repurchase agreement with the bond dealer. The 30-day term repo rate was 2.3 percent per year. At the end of the 30 days, the bonds purchased by the portfolio manager have increased in value by 0.4 percent and the portfolio manager decided to sell the bonds. No coupons were received during the 30-day period.

Compute the 30-day rate of return on the equity and borrowed components of the portfolio.

R_E= 0.5000%; R_B= 0.1167 percent

R_E= 0.4000%; R_B= 0.1167 percent

R_E= 0.4000%; R_B= 0.1917percent

R_E= 0.4000%; R_B= 0.2083 percent