A trader wants to take a short position in an on-the-run 20-year US Treasury bond with a $4,000,000 face value. The trader plans to enter into a 20-day reverse repo transaction at a quoted repo rate of 1.5%. The initial price of the Treasury bond is $101.25. If the price of the Treasury decreases to $101.00 20-days later, what is the traders total profit or loss on the transaction?

Answer rating: 100% (QA)

To calculate the traders total profit or loss on the transaction we need to consider the interest ea... View the full answer