Assume that you made a repo transaction in which you sold securities for 50 million TL and will buy the securities back for 50,025,000 one day later. What is the repo rate to you? Why would you do such transaction?

Assume that you made a repo transaction in which you sold securities for 50 million TL and will buy the securities back for 50,025,000 one day later. What is the repo rate to you? Why would you do such transaction?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter8: Securities Law Considerations When Obtaining Venture Financing

Section: Chapter Questions

Problem 1cM

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

Assume that you made a repo
transaction in which you sold securities
for 50 million TL and will buy the
securities back for 50,025,000 one day
later. What is the repo rate to you?
Why would you do such transaction?

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