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QUESTION: 241 Topic: 3, Volume C

What is the Repurchase Price of a classic repo?

The market value of bond collateral at the end of the repo at the clean price of the bond
The market value of bond collateral at the end of the repo at the dirty price of the bond
The amount of cash actually paid for collateral at the start of the repo
The amount of cash actually paid for collateral at the start of the repo plus repo interest

Answer(s): D

QUESTION: 242 Topic: 3, Volume C

A CD with a face value of USD 50,000,000.00 and a coupon of 4.50% was issued at par for 90 days and is now trading at 4.50% with 30 days remaining to maturity. What has been the capital gain or loss since issue?

+USD 373,599.00
+USD 186,099.00
-USD 1,400.99
Nil

Answer(s): C

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QUESTION: 243 Topic: 3, Volume C

You buy a 181-day 2.75% CD with a face value of USD 1,500,000.00 at par when it is issued. You sell it in the secondary market after 150 days at 2.60%. What is your holding period yield?

2.60%
2.75%
2.775%
2.813%

Answer(s): C

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QUESTION: 244 Topic: 3, Volume C

The Interest Rate Parity Theorem should work because, when one sells a low interest rate currency to invest in a high interest rate currency and hedges the currency risk:

The cost of hedging is given by the forward points, which are equal to the interest rate differential between the two currencies
The high interest rate currency will depreciate
The profit from the appreciation of the high interest rate currency has been hedged away D. Interest rates are mean reverting, which means the low interest rate will tend to rise and the high interest rate will tend to fall

Answer(s): A

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