The spot/week repo rate for the 4.25% OAT 2015 is quoted to you at 2.35-38%. You buy bonds with a market value of EUR 3,295,500.00 through a sell/buy-back. The Repurchase Price is:
A) EUR 3,297,004.19
B) EUR 3,297,005.86
C) EUR 3,297,025.09
D) EUR 3,296,985.23

Question

Quizplus · Accepted Answer

To calculate the repurchase price, we need to use the following formula:

Repurchase Price = Market Value / (1 + (Spot/week rate * Days/360))

Market Value = EUR 3,295,500.00
Spot/week rate = 2.35-38% (we'll use the mid-point of 2.36%)
Days = 7

Repurchase Price = 3,295,500.00 / (1 + (2.36% * 7/360)) 
Repurchase Price = EUR 3,297,005.86

Therefore, the correct answer is B.

The Spot/week Repo Rate for the 4