Question

The US Treasury announces its intent to auction $15 billion par value of 26-week Treasury bills. It receives $5 billion of non-competitive bids.

The competitive bids received are as follows:

Price Per $1 of Par Par Value 0.9200 $3 billion 0.9170 $4 billion 0.9140 $5 billion 0.9110 $4 billion 0.9100 $3 billion What is the revenue that the Treasury could have generated (in billions)?

part b) If the security auctioned above was Canada Government bond, what would be the revenue of the auction? Round your answer to 2 decimal points.

Round your answer to 2 decimal points.

Answer 1

Answer :
According to given data,The expense that will be designated to competitive bids will do $15-$5 billion = $10b. Considering non-competitive bids amount to $5 billion that would give 0.9140( Corresponding via $5billion) the cheapest price allowed for all bidders and all bidders would return that payment.
The revenue to auction will be $15 billion x 0.9140 = $13.71 Billion.
All non-competitive bids will get anything they are tendering for and so will the competitive bids, who contributed 0.9200 also 0.9170. About the bidders, who have contributed 0.9140, individual will get 3/5 if they bid .