The treasury wants to auction 5 billion dollars- worth of bonds. There are non-competitive bidders...
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The treasury wants to auction 5 billion dollars- worth of bonds. There are non-competitive bidders bidding for 2 billion dollars, and three competitive bidders. One is bidding 6.5% for 1 billion, the other 6.6% for 1 billion and the third 6.7% for 3 billion. What would be the yield and the allocation if a uniform price (a price that clears the market) auction takes place? What would be the yield and the allocation if a discriminating auction takes place?
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