Question
Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $32,950,000, with
Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $32,950,000, with the promise to buy them back at a price of $33,000,000. |
a. | Calculate the yield on the repo if it has a 4-day maturity. (Use 360 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Yield on the repo | % |
b. | Calculate the yield on the repo if it has a 12-day maturity. (Use 360 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) |
Yield on the repo | % |
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