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A dealer repos 10 million t-bills the haircut is 5 the

Question: A dealer repos $10 million T-bills. The haircut is 5%. The parameters of the deal are as follows:

• T-bill yield: 2%

• Maturity of T-bills: 90 days

• Repo rate: 2.5% term: 1 week

a. How much cash does the dealer receive?

b. How much interest will be paid at the end of the repo deal?

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Finance Basics: A dealer repos 10 million t-bills the haircut is 5 the

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