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KTOP CEDSUSV /Financial%20Markets%20and%20nstitutions/EMAN 21 01 1 %20an%20201 28. Explain how a central bank influences the over-night borrowing rate using repo Use a graph to facilitate you explanation. (15 Marks) SECTION Answer ALL questions 29. A bank needs to borrow £5million from the central bank. The bank enters into a repo agreement with the central bank for 7 days at an interest rate of 06% per annum. The bank sells a portfolio of treasury securities worth £5million. What would be the repurchase value of this repo? (10 Marks)

help with question 29 thank you

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Answer #1

Interest = Rate*Portfolio* Tenure

= 0.6%*5000000*7/365 = 575.34

Repurchase value = Portfolio value+Interest

= 5000000+ 575.34

= $5000575.34

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