The Federal Reserve is offering Treasury bills with a par value of $25 billion for sale.They have received $7 billion of noncompetitive bids.The competitive bids for a $10,000 par value bond are: (Qty in billions) What price will Bidder A pay per bond,assuming that bid is accepted?

Question

The Federal Reserve is offering Treasury bills with a par value of $25 billion for sale.They have received $7 billion of noncompetitive bids.The competitive bids for a $10,000 par value bond are: (Qty in billions)  What price will Bidder A pay per bond,assuming that bid is accepted?

Quizplus · Accepted Answer

Amount available to competitive bidders = $25b − $7b = $18b
Lowest acceptable bid price is $9,600, which is Bidder C.
All bidders pay the stop-out bid which is $9,600.

The Federal Reserve Is Offering Treasury Bills with a Par