CFA Practice Question

There are 490 practice questions for this study session.

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?

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 7

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.
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