XYZ plc, a UK trading company, believes that the price of UK government bonds may rise and plans to use a sale and repurchase agreement (repo) of 12,400,000 bonds to profit from the expected price rise. A repo dealer quotes a 5% haircut and an annualised repo rate of 1% a) Calculate the size of the impairment and explain the repurchase made by the company. b) Ten days after the purchase of the bond, its market value is 1240744 and the repo is closed. Calculate. i. the annualised rate of return on the bond ii. the annualised percentage return of the trading company c) Assume the repo ends after 15 days, at which point the bond has a value of 1239,380. Calculate the annualised return for the trading company. d) Given the results in parts b) and c), comment on the risks arising from the use of repo financing