Question 6.4 (Will upvote for correct answer)

Which of the following are typical repurchase agreement denominations? Select all that apply.

A. $200,000

B. $900,000

C. $50,000,000

D. $70,000,000

Which of the following are characteristics of repurchase agreements? Select all that apply.

A. Most repo transactions are backed by commercial paper or NCDs.

B. There is no secondary market for repurchase agreements.

C. Their maturities are normally between 1 and 20 years.

D. Their denominations are typically $10 million or more.

Suppose Susan initially purchased securities at a price of $39,240,000 while agreeing to sell them back to the original owner at a price of $40,000,000 at the end of a 6-month period. Assuming a 360 day year, the yield (or repo rate) on this repurchase agreement is:

A. 3.64%

B. 3.87%

C. 3.99%

D. 4.14%