Calculate the following: a. If the overnight fed funds rate is quoted as 2.25 percent, what is the bond equivalent rate? b. Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of Rs 24,950,000, with promise to buy them back at a price of Rs 25,000,000. Calculate the yield on the repo if it has 21 days to maturity. E. A government securities dealer is currently borrowing Rs 10 million from a money center bank using repurchase agreements based on Treasury bills. If today's repo rate is 5.5 percent, how much in interest will the dealer owe the bank for an overnight borrowing? A security dealer borrows Rs 25 million cash through repo from a company for one day. The dealer pays Rs 2,500 in interest on this loan. What is repo rate on this loan?
Calculate the following: a. If the overnight fed funds rate is quoted as 2.25 percent, what is the bond equivalent rate? b. Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of Rs 24,950,000, with promise to buy them back at a price of Rs 25,000,000. Calculate the yield on the repo if it has 21 days to maturity. E. A government securities dealer is currently borrowing Rs 10 million from a money center bank using repurchase agreements based on Treasury bills. If today's repo rate is 5.5 percent, how much in interest will the dealer owe the bank for an overnight borrowing? A security dealer borrows Rs 25 million cash through repo from a company for one day. The dealer pays Rs 2,500 in interest on this loan. What is repo rate on this loan?
Chapter7: Types And Costs Of Financial Capital
Section: Chapter Questions
Problem 2EP
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