Lecture 1 Presented by Amir Khan Brief Profile: Amir Khan Currently working as EVP - Head Treasury Mashreq Bank. Previous roles: SVP Bank Alfalah Treasury, VP NBP Treasury and Senior Dealer at HBL Treasury Also, visiting faculty at Institute of Business Administration. Courses taught: Fixed Income Investments, Financial Management, International Finance, Financial Modelling, Security Analysis and Capital Markets Previously worked as Debt Capital Market Expert for USAID project of Financial Market Development in Pakistan Qualification: MBA from College of William & Mary USA, attended Harvard University HPAIR Program, completed courses of MIT Just Money: Banking as if Society Mattered, IMF Financial Market Analysis and World Bank Debt Management Money Market Money Market Money Market Instruments Money Market Instruments Repurchase Agreements Repurchase Agreements One party sells a security to a second party, while agreeing to buy it back at a set date at a set price Equivalent to first party borrowing with security acting as collateral Short term: Overnight Repo / Term Repo (>30 days) Interest rate (repo rate) implied by prices Repurchase Agreements A bank sells 9,876,000 worth of T-bills and agrees to repurchase them in 14 days at 9,895,000. What is the repo rate? Repurchase Agreements A bank sells 9,876,000 worth of T-bills and agrees to repurchase them in 14 days at 9,895,000. What is the repo rate? Repurchase Agreements If the overnight repo rate is 4.5% what is the payment tomorrow for a repo of $10,000,000? Repurchase Agreements If the overnight repo rate is 4.5% what is the payment tomorrow for a repo of $10,000,000?
