In a Treasury auction of $800 million par value T-bills, the following bids were received: bidder...

In a Treasury auction of $800 million par value T-bills, the following bids were received:

bidder	bid amount	price
1	$ 300 m	0.9820	competitive
2	$ 200 m	0.9850	competitive
3	$ 350 m	0.9825	competitive
4	$ 250 m	0.9835	competitive
5	$150 m	0.9845	competitive
6	$ 220 m		Non-competitive

Who will receive T-bills in this auction, in what quantity, and at what price?

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In the competitive bids, all the bids are collected from potential buyers where the buyer specifies the price and quantity in the quotation. The issuer arranges all quotations in descending order of price. The highest bidder receives the T-bills.

Bidder	Bid Amount	Allotted Amount	Price
2nd Bidder	$200 million	$200 million	$0.9850
5^th Bidder	$150 million	$150 million	$0.9845
4^th Bidder	$ 250 million	$250 million	$0.9835
3^rd Bidder	$ 350 million	$200 million	$0.9825
1st Bidder	$300 million	$0	$0.9820
Total:		$800 million

Hence from the results, we find that the 2nd bidder has the highest price. Thus, the 2nd bidder will receive T-bills of amount $200 million. After dischargement of top bidders demand, the next top bidder will receive the T-bills. The 5^th bidder will receive $150million T-bills.The next top bidder will be 4^rd bidder. The 4^rd bidder will receive $250 billion. Finally 3rd bidder will receive $200 million

jeff jeffy answered 1 year ago

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