Should Albert Mills do this trade? Back up your answer with the following analyses: 1. Write out the initial transaction

[answerhappygod]

Should Albert Mills do this trade? Back up your answer with the
following analyses: 1. Write out the initial transaction and cash
flows for the trade based on entering the swap, purchasing the
Treasury bond, and borrowing using the repurchase agreement. Be
sure to use discount pricing for the repurchase agreement and to
take the 2% haircut into account. Assume that the repurchase
agreement will last 14 days. Assume $1 billion notional principal
for the swap and $0.97 billion pre haircut face value and $1.04
billion price for the Treasury bond. Please use the rounded numbers
from above and presented in the case. Assume that initial LIBOR is
set at 2.51% and is fixed for three months (through February 2009),
beginning on the swap date (November 5, 2008). The fixed swap rate
is 4.256%. The coupon on the Treasury is 4.5%.