Youre a hedge fund manager and you borrow money in order to purchase a 10-year bond with a 4% coupon which yields 4.25%. You employ a repurchase agreement to borrow, with a repo rate of 2%.

What is the breakeven price of the bond for a 1-year holding period? A bonds net carry is its current yield minus its financing (repo) rate. What is this bonds net carry? Calculate the percentage change between the breakeven price and the starting price. How does it compare to the net carry?