- CFA Exams
- CFA Level I Exam
- Topic 6. Fixed Income
- Learning Module 4. Fixed-Income Markets for Corporate Issuers
- Subject 2. Repurchase Agreements
CFA Practice Question
The repurchase rate is 5.40% on a loan of four days for which $100,000,000 par value of a bond is sold to the lender at par. What is the repurchase price?
B. $100,025,000
C. $100,060,000
A. $100,013,500
B. $100,025,000
C. $100,060,000
Correct Answer: C
Repurchase price = original price x (rate x (m/360)+1) = $100,060,000
User Contributed Comments 8
| User | Comment |
|---|---|
| johntan1979 | To be more accurate: $100,060,014 |
| Fabulous1 | Actually not. The price is exactly like stated in the answer as 5.4 % can be divided by 90 days... |
| Inaganti6 | Damn someone disagreed with. JohnTan |
| khalifa92 | true its exactly 100,060,000. |
| sshetty2 | why Are we using a 360 day yr here? |
| unknown | Always use 360 days for Repo. |
| UcheSam | It is better to use the Repurchase Rate formula than the present value approach as it produces exact answer e.g 100,060,000; also, given the proximity of the options at times. |
| thevinu | @johntan1979 to be accurate, 100,060,013.5 |