5 Suppose a dealer bank is considering buying $20,000,000 of bonds and it wants to borrow as much as possible using an overnight repurchase agreement (repo). (a) Suppose the Haircut (HC) on the bonds is currently 0.04(4%). By pledging the $20,000,000 of bonds as collateral how much could the dealer bank borrow? How much of its own cash would the dealer bank have to contribute to buy the bonds? (b) Briefly explain how the dealer bank can rollover (ie renew) the overnight repo agreement and finance the bonds using borrowed money for a year. Why might this be a profitable action for the dealer bank? (c ) Outline one risk the dealer bank faces by adopting this rollover strategy to finance its bond purchase