Consider a T-note currently trading at a price of $9,800.

a) you are entering into a 14-day repo to repo out the above T-note. Assume

a haircut of 3% and the 14-day repo rate is 4% p.a. How much will you

pay or receive at the end of the 14-day period?

b) Describe a scenario where the above 14-day repo rate can be signicantly

negative.