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 sell them back to the correspondent bank at a price of $32,000,000.
a. Calculate the yield on the repo if it has a 5-day maturity. (Use 360 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Yield on the repo %
b. Calculate the yield on the repo if it has a 15-day maturity. (Use 360 days in a year. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Yield on the repo %