Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $31,950,000, with the promise to buy them back at a price of $32,000,000. a. Calculate the yield on the repo if it has a 5-day maturity. b. Calculate the yield on the repo if it has a 15-day maturity. (For all requirements, use 360 days in a year. Do not round intermediate calculations. Round your percentage answers to 5 decimal places. (e.g., 32.16161)) a. b * Answer is complete but not entirely correct. Yield on the repo Yield on the repo 1.02857% 0.34286 %
Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $31,950,000, with the promise to buy them back at a price of $32,000,000. a. Calculate the yield on the repo if it has a 5-day maturity. b. Calculate the yield on the repo if it has a 15-day maturity. (For all requirements, use 360 days in a year. Do not round intermediate calculations. Round your percentage answers to 5 decimal places. (e.g., 32.16161)) a. b * Answer is complete but not entirely correct. Yield on the repo Yield on the repo 1.02857% 0.34286 %
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 4P
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![Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of
$31,950,000, with the promise to buy them back at a price of $32,000,000.
a. Calculate the yield on the repo if it has a 5-day maturity.
b. Calculate the yield on the repo if it has a 15-day maturity.
(For all requirements, use 360 days in a year. Do not round intermediate calculations. Round your percentage answers to 5
decimal places. (e.g., 32.16161))
a.
b.
X Answer is complete but not entirely correct.
Yield on the repo
Yield on the repo
1.02857 %
0.34286 %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faaf6cf7e-1c9e-4666-91bb-50f72def0471%2Fde232b46-dffe-4896-b9cf-a43f31457c63%2F5xfiwx8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of
$31,950,000, with the promise to buy them back at a price of $32,000,000.
a. Calculate the yield on the repo if it has a 5-day maturity.
b. Calculate the yield on the repo if it has a 15-day maturity.
(For all requirements, use 360 days in a year. Do not round intermediate calculations. Round your percentage answers to 5
decimal places. (e.g., 32.16161))
a.
b.
X Answer is complete but not entirely correct.
Yield on the repo
Yield on the repo
1.02857 %
0.34286 %
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