to maturity of the treasury bond), whilst paying interest on the repurchase agreement, known as repo financing. The swap spread is the yield to maturity on the Treasury bond minus the fixed-rate of the swap. Swap Spread = Yield to Maturity of Swap – Yield to Maturity of Treasury Bond The result of this equation is most often positive. Since the swap's floating rate is the BBSW, we find that the swap will be above the yield to maturity of the Treasury Bond as the swap is almost always above the repurchase rate (RBA, 2021). This is because the BBSW is used as a benchmark for the pricing of AUD derivatives and securities, hence the repurchase rate of the Treasury Bond should be higher. Yield Curve Arbitrage Yield Curve Arbitrage involves taking long and short positions at different points along the yield curve. This strategy involves identifying points on the yield curve that show a mismatch in pricing, this mismatch results in either rich or cheap points. This will involve investors re-modelling to see points in which the bond's actual yield differs from the model-implied yield and will bet on the reversion of the curvature. Once this has been identified the investor will seek to profit off either the rich or cheap points on the yield curve by going short or long bonds. They will hold these investments until the trade converges, and then the trade can be liquidated for profit. In taking short and long term positions on the yield curve the investor is hedging their investments. An example of this would be betting against a government bond, whilst also buying two bonds on either side of the original bet (Karsimus, 2015). Mortgage Arbitrage Mortgage Arbitrage strategy is used by fixed-income traders, whereby they trade what are known as Mortgage-backed securities (MBS's). MBS's are securities that are a grouping of mortgages that are collateralized by real estate and guaranteed by an agency. An agency in this case is where the principal has hired the agent to perform a service on their behalf, in this case of MBS's, a bank could be the agent for the security. Collateralization is when the value of an asset is used to secure a loan, whereby if a default occurs, the issuer of the loan can seize the asset and consequentially sell the asset, in this case of MBS's, it would be the selling