Let's stick with buying $100MM principal amount of the 6.125% security, and think about financing it in the repo market. Suppose your repo counterparty wants 2% margin, so that she will value the security at the bid, divide by 1.02, and lend you that amount. Coupon Day Bid Ask Yield 6.125 1/21/21 144-22 143-00+ 0.896 6.125 1/22/21 149-29 143-08 0.869 a. How much cash of your own would you need to buy this bond? b. What yield corresponds to the loan amount? That is, what yield would the bond have to rise to, in order for the 2% margin to be wiped out? Let's stick with buying $100MM principal amount of the 6.125% security, and think about financing it in the repo market. Suppose your repo counterparty wants 2% margin, so that she will value the security at the bid, divide by 1.02, and lend you that amount. Coupon Day Bid Ask Yield 6.125 1/21/21 144-22 143-00+ 0.896 6.125 1/22/21 149-29 143-08 0.869 a. How much cash of your own would you need to buy this bond? b. What yield corresponds to the loan amount? That is, what yield would the bond have to rise to, in order for the 2% margin to be wiped out