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In a presentation to management, a bond trader makes the following statements about repo collateral:
I. Statement 1: The difference between the federal funds rate and the general collateral rate is the special spread.
II. Statement 2: During times of financial crises, the spread between the federal funds rate and the general collateral rate widens.
Which of the trader's statements are accurate?
A
Both statements are incorrect.
B
Only statement 1 is correct.
C
Only statement 2 is correct.
D
Both statements are correct.