The Treasury plans to issue $125 million of 52-day Treasury Bills using a Dutch auction system. They received $15 million in non-competitive bids. They also received the following competitive bids: Broker-dealer A bids $40,000,000 at 11.70% Broker-dealer B bids $14,000,000 at 11.50% Broker-dealer C bids $18,000,000 at 10.80% Broker-dealer D bids $15,000,000 at 10.50% Broker-dealer E bids $18,000,000 at 9.90% Broker-dealer F bids $17,000,000 at 9.60% At what rate will the auction clear and what amounts do each broker-dealer receive? b) Explain syndicated loans and explain the role of the lead manager.
The Treasury plans to issue $125 million of 52-day Treasury Bills using a Dutch auction system. They received $15 million in non-competitive bids. They also received the following competitive bids: Broker-dealer A bids $40,000,000 at 11.70% Broker-dealer B bids $14,000,000 at 11.50% Broker-dealer C bids $18,000,000 at 10.80% Broker-dealer D bids $15,000,000 at 10.50% Broker-dealer E bids $18,000,000 at 9.90% Broker-dealer F bids $17,000,000 at 9.60% At what rate will the auction clear and what amounts do each broker-dealer receive? b) Explain syndicated loans and explain the role of the lead manager.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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| The Treasury plans to issue $125 million of 52-day Treasury Bills using a Dutch auction system. | |||||||||||
| They received $15 million in non-competitive bids. | |||||||||||
| They also received the following competitive bids: | |||||||||||
| Broker-dealer A bids $40,000,000 at 11.70% | |||||||||||
| Broker-dealer B bids $14,000,000 at 11.50% | |||||||||||
| Broker-dealer C bids $18,000,000 at 10.80% | |||||||||||
| Broker-dealer D bids $15,000,000 at 10.50% | |||||||||||
| Broker-dealer E bids $18,000,000 at 9.90% | |||||||||||
| Broker-dealer F bids $17,000,000 at 9.60% | |||||||||||
| At what rate will the auction clear and what amounts do each broker-dealer receive? | |||||||||||
|
b) Explain syndicated loans and explain the role of the lead manager.
|
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