A broker repos USD 20 million in Treasury Bills (T-Bills).The haircut is 5%.The parameters of the operation

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A broker repos USD 20 million in Treasury Bills (T-Bills). The haircut is 5%. The parameters of the operation are the following: • Yield on Treasury bills: 2% • Maturity on Treasury bills: 90 days • Repurchase rate: 2.5%, term: 1 week

(a) How much cash does the dealer receive?

(b) How much interest will be paid at the end of the repo agreement?

Related Book For answer-question

Fundamentals of Financial Management

ISBN: 978-0324664553

Concise 6th Edition

Authors: Eugene F. Brigham, Joel F. Houston

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Posted Date: Jul 25, 2023 08:08 AM

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A broker repos USD 20 million in Treasury Bills (T-Bills).The haircut is 5%.The parameters of the operation

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Fundamentals of Financial Management

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