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Calculate the forward price of bond trading

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Reference no: EM131697001

Question: A dealer wants to borrow $10 million using a bond repo but due to certain market restriction he cannot repo out the bond for 2 months.

a. Suggest a strategy so that he can borrow the cash for the period without losing the permanent ownership of the bond.

b. Calculate the forward price of bond trading at $43.59 if the current repo rate is 4% p.a.

Reference no: EM131697001

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