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Create Leverage with Repo (Continued) o The Following formula is used to calculate the dollar interest on a repo transaction b(orate) xrepp term/3860 Example: A
Create Leverage with Repo (Continued) o The Following formula is used to calculate the dollar interest on a repo transaction b(orate) xrepp term/3860 Example: A dealer delivers (sells) $10 million of treasury security to a customer and buy it back in to the next day If the Repo rate is 6.5%, assuming 360 days a year convention 1. What is the amount borrowed? 2. What is the dollar interest
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