Assume bimb enters into a sale and buy back sbba agreement, Ask an Expert

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Assume BIMB enters into a Sale and Buy Back (SBBA) agreement on 8 March 2015 to sell IAB security to Bank Muamalat with an undertaking that BIMB will purchase the same securities back on 17 March 2015 (repos for 9 days). The IAB involved in the SBBA has a face value of RM500,000 and maturing in 90 days.

a. What is the value of the proceeds, i.e. the price of the IAB to be sold to Bank Muamalat on 8 March 2015, if the rate of profit is 4% per annum?

b. What is the price of the IAB that BIMB will buy back from Bank Muamalat on 17 March 2015?

c. How much is the total profit earned by Bank Muamalat for that 9 days SBBA transaction?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92852646

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