You own $1,000,000 in face value of bond that is currently priced at 99.50. The accrued interest per 100 of face value is 0.50. You would like to use this as collateral for a 5 day repurchase agreement. You are quoted a repo rate of 2% and a haircut of 0.25%. Calculate the amount you can borrow against this bond and the amount you wil pay back at the end of the repurchase agreement. Amount Borrowed = $1,000,000,00; Amount Paid Back = $1,020,000.00 Amount Borrowed = $997,500.00; Amount Paid Back = $1,000,000.00 Amount Borrowed = $997,500.00; Amount Paid Back = $997,777.08 Amount Borrowed = $995,000; Amount Paid Back = $995,276.39 %3D %3D %3D %3D
You own $1,000,000 in face value of bond that is currently priced at 99.50. The accrued interest per 100 of face value is 0.50. You would like to use this as collateral for a 5 day repurchase agreement. You are quoted a repo rate of 2% and a haircut of 0.25%. Calculate the amount you can borrow against this bond and the amount you wil pay back at the end of the repurchase agreement. Amount Borrowed = $1,000,000,00; Amount Paid Back = $1,020,000.00 Amount Borrowed = $997,500.00; Amount Paid Back = $1,000,000.00 Amount Borrowed = $997,500.00; Amount Paid Back = $997,777.08 Amount Borrowed = $995,000; Amount Paid Back = $995,276.39 %3D %3D %3D %3D
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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Transcribed Image Text:You own $1,000,000 in face value of bond
that is currently priced at 99.50. The accrued
interest per 100 of face value is 0.50. You
would like to use this as collateral for a 5 day
repurchase agreement. You are quoted a repo
rate of 2% and a haircut of 0.25%. Calculate
the amount you can borrow against this bond
and the amount you wil pay back at the end
of the repurchase agreement.
Amount Borrowed = $1,000,000,00; Amount
Paid Back = $1,020,000.00
Amount Borrowed = $997,500.00; Amount
Paid Back = $1,000,000.00
Amount Borrowed = $997,500.00; Amount
Paid Back = $997,777.08
Amount Borrowed = $995,000; Amount Paid
Back = $995,276.39
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