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In a reverse repo transaction, a bank buys Treasury bonds whose market value is $9.8 million and lends 97% of the market value to the seller (i.e., the borrower) with the promise to sell the bonds back in 12 days. What is the bank's profit if the repo rate is 3.9% ? Round to the nearest dollar, drop the $ sign.

In a reverse repo transaction, a bank buys Treasury bonds whose market value is $9.8 million and lends 97% of the market value to the seller (i.e., the borrower) with the promise to sell the bonds back in 12 days. What is the bank's profit if the repo rate is 3.9% ? Round to the nearest dollar, drop the $ sign.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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In a reverse repo transaction, a bank buys Treasury bonds whose market value is $9.8 million and lends 97% of the market value to the seller (i.e., the borrower) with the promise to sell the bonds back in 12 days. What is the bank's profit if the repo rate is 3.9% ? Round to the nearest dollar, drop the $ sign.
Transcribed Image Text:In a reverse repo transaction, a bank buys Treasury bonds whose market value is $9.8 million and lends 97% of the market value to the seller (i.e., the borrower) with the promise to sell the bonds back in 12 days. What is the bank's profit if the repo rate is 3.9% ? Round to the nearest dollar, drop the $ sign.
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