Question

Buser Corp. purchases certain securities for $4,921,349, with an agreement to sell them back at a price of $4,950,000 at the end of a 30-day period. The repo rate is ____ percent.

Answer 1

6.99%

Step-by-step explanation:

The computation of repo rate in percentage is given below:-

Purchases securities = $4,921,349

Selling price = $4,950,000

Interest Payment

= $4,950,000 - $4,921,349

= $28,651

So, the repo rate per month

= Implicit Interest Payment ÷ Purchase Price

= $28,651 ÷ 4,921,349

= 0.58% per month

Therefore, the yearly Repo Rate

Monthy repo rate × 12 month

= 0.58% × 12

= 6.99%