EXAMPLE 5-7 Calculation of a Yield on a Repurchase Agreement Suppose a bank enters a reverse repurchase agreement in which it agrees to buy fed funds from one of its correspondent banks at a price of $10,000,000, with the promise to sell these funds back at a price of $10,000,291.67($10,000,000 plus interest of $291.67) after five days. The yield on this repo to the bank is calculated as follows