The Tom/next GC Repo Rate for German Government Bonds Is

question 570

Multiple Choice

The tom/next GC repo rate for German government bonds is quoted to you at 1.75-80%. As collateral, you sell EUR 10,000,000.00 million nominal of the 5.25% Bund July 2012, which is worth EUR 11,260,000.00. If you have to give an initial margin of 2%, the Repurchase Price is:

• A) EUR 11,035,336.41
• B) EUR 11,035,351.74
• C) EUR 11,039,752.32
• D) EUR 11,039,767.65

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Definitions:

Firm Commitment Underwriting

A method of underwriting where the underwriter commits to buying all the securities from the issuer and selling them to investors, assuming full financial responsibility for any unsold securities.

Underwriting Spread

The difference between the price at which investment bankers buy an issuance from the issuer and the price at which they sell it to the public.

Shares

Shares are portions of equity within a corporation or financial asset, offering a right to proportional dividends when profits are declared.

Dutch Auction

is a bidding strategy where the price of an item is lowered until it gets a bid, the first bid made is the winning offer.