Karan Sir has taught in the class that TSECF (Term Structure of Expected Cashflow) increases when we di Reverse Repo. However , in the above question it says Reverse Repo has no effect both on TSECF and TSECCF. What is the correct answer?
Share
Yes correct.
Acc to What sir has taught, there will be effect on both TSECF AND TSECCF by a reverse repo transaction as well as by a repo transaction.
But In schweser it was given that Repo transaction will not be affecting the TSECF and TSECCF (which is wrong) but reverse repo would be affecting it..
Going by what I’ve stated, I think that they have given the wrong answer as long as reverse repo is considered because it does affect both TSECF and TSECCF.
However had there been a repo transaction, answer would be this only as it’s given in the book. (We’ll have to remember that)
Hope this helps!
This is given in schweser. Compare it with the one in the sir’s lecture. You’ll get the difference.