Please Describe the Current Auction Method or Methods for Selling

Question

Examlex · Accepted Answer

The Answer is The uniform price auction method is the principal means of selling Treasury notes, bonds and bills today. The Treasury announces the amount of securities available and calls for bids. Competitive tenders (over $1 million) bid aggressively, trying to offer a price high enough to win an allotment but not too high. Treasury bill bids are based upon the discount rate (DR), while investors submitting competitive bids for Treasury notes and bonds express their offers on an annual percentage yield to maturity basis. Noncompetitive tenders (less than $1 million) accept the price determined by the auction. Generally, the Treasury fills all noncompetitive orders.
Federal Reserve officials open all bids at the specified time and arrange them from the highest to the lowest price bid (lowest to highest yields). The allocation begins with the highest bidder on down until all available securities are allocated. The lowest successful price bid, known as the "stop-out"
(or market-clearing) price, becomes the common price that all successful bidders actually pay to the Treasury.

Please Describe the Current Auction Method or Methods for Selling

Essay

Correct Answer:
Verified

Please Describe the Current Auction Method or Methods for Selling

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified