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Answer: A

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A trader for EtaBank wants to take a leveraged position in Collateralized Debt Obligations. These CDOs can be used in a repurchase transaction at a 20% haircut. Starting with $100 worth of CDOs, which one of the following four positions would completely utilize the available leverage?
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B. The trader can buy $100 in CDO's, and repo the CDO's to get back $20, plus interest.
C. The trader can buy $100 in CDO's, and repo the CDO's to get back $100, less interest.
D. The trader can buy $100 in CDO's, and repo the CDO's to get back $60, plus interest.
Answer: A

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