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Question 4: Calculation of a Yield on a Repurchase Agreement: Suppose a bank enters a reverse repurchase agreement in which agrees to guy fed funds
Question 4: Calculation of a Yield on a Repurchase Agreement: Suppose a bank enters a reverse repurchase agreement in which agrees to guy fed funds from one of its correspondent banks at a price of $25,000,000, with the promise to sell these funds back at a price of $25,001,530.50 ($25,000,000 plus interest of $1,530,50) after 7 days. Please calculate the yield on this repo for the bank.
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