标题: fun repo rate question [打印本页] 作者: transferpricing 时间: 2011-7-11 20:05 标题: fun repo rate question
"Repo rate is directly related to maturity of repo, inversely related to quality of collateral, and directly related to the maturity of the collateral. US Tbills are often purchased by Treasury dealers using repo transactions, and since they have high liquidity, short maturities, and no default risk, the repo rate is usually quite low."
"The greater the control the lender has over the collateral, the lower the repo rate. If the availability of the collateral is limited, the repo rate will be higher"
a. 1 is correct
b. 2 is correct
c. 1 is incorrect 2 is correct
d. neither is correct作者: bpdulog 时间: 2011-7-11 20:05
"and directly related to the maturity of the collateral? "
Are they related?作者: pennyless 时间: 2011-7-11 20:05
D
Maturity of collateral already taken into account via quality.
If collateral hot rate is cheaper.
Edited 1 time(s). Last edit at Saturday, May 28, 2011 at 06:09PM by Paraguay.作者: ohai 时间: 2011-7-11 20:05
SO what is the answer SKIPP , its 1 am and i want to sleeeppp作者: justin88 时间: 2011-7-11 20:05
1am? you in Turkey or sometrhing?
Answer was D.
Although maturity of collateral is considered in determining the quality of collateral, it does not act as a separate factor in determining repo rate.
If availability of collateral is limited, repo rate will be lower, not higher. Limited availability makes collateral more valuable due to scarcity (ie callable bonds, long maturity bullets)作者: thommo77 时间: 2011-7-11 20:05
i think you are referring to maturity of REPO.. the question says maturity of COLLATERAL(ie a 1 yr bond as collateral versus a 10 yr bond)作者: lcai 时间: 2011-7-11 20:05
Not to get into too much industry but the term of the collateral will affect the amount that you can borrow not the interest rate.
There will be a higher margin to the lender i.e. only loaning 90% of face.作者: mar350 时间: 2011-7-11 20:05
DD87 Wrote:
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> LEBANON...
>
>
> Thx for the post
dude i was just there. in beirut. awesome city.
schweser gives rational on pg 232 practice exam book 2 exam 1 afternoon question 13.2C作者: Unforseen 时间: 2011-7-11 20:05
Yeah Awesome for a vacation ONLYYYY.作者: Roflnadal 时间: 2011-7-11 20:05
oh never mind i thought 1 was
The greater the control the lender has over the collateral, the lower the repo rate
with 2 being
If the availability of the collateral is limited, the repo rate will be higher"作者: canadiananalyst 时间: 2011-7-11 20:05
To get this question like this right, which of the following is the most important?
a) Reading carefully
b) Thinking logically
c) Memorizing the all six factors that could affect repo rate
d) {?}
...Very good question.
Edited 1 time(s). Last edit at Saturday, May 28, 2011 at 07:32PM by deriv108.
