Question

In a Treasury auction of $1.4 billion par value 91-day T-bills, the following bids were submitted:Bidder 1 bid for $750 million at Price $0.9911; Bidder 2 bid for $150 million at price 0.9914; Bidder 3 bid for $1 billion at price 0.9937; and Bidder 4 bid for $300 million at price 0.9939. If the Treasury also received $400 million in non-competitive bids, will bidder 3 receive T-bills? in what quantity, and at what price?

Select one:

a. No

b. Yes, 400 million, 0.9938

c. Yes, 0.7 billion, 0.9937

d. Yes, 100 million, 0.9937

e. All of the above is not right.

Answer 1

Step 1	Auction Value	1400M
				Rank
	Bidder 1	750M	0.9911	4
	Bidder 2	150M	0.9914	3
	Bidder 3	1000M	0.9937	2
	Bidder 4	300M	0.9939	1
	Non Competitive	400M
Step 2	First Non competitive will be allotted $400M, balance left $1,000M
				Unallotted
	Bidder 4 Allotted	300M		700M
	Bidder 3 Allotted	700M		0
Ans is c	Yes, 0.7 Billion, 0.9937