Financial Markets and Institutions (2-downloads)

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Part 5 Financial Markets

11. In a Treasury auction of $2.1 billion par value 91-day

T-bills, the following bids were submitted:

If only these competitive bids are received, who will

receive T-bills, in what quantity, and at what price?

12. If the Treasury also received $750 million in non-

competitive bids, who will receive T-bills, in what

quantity, and at what price? (Refer to the table under

problem 11.)

Bidder

Bid Amount

Price

1

$500 million

$0.9940

2

$750 million

$0.9901

3

$1.5 billion

$0.9925

4

$1 billion

$0.9936

5

$600 million

$0.9939

W E B   E X E R C I S E S

The Money Markets

1. Up-to-date interest rates are available from the

Federal Reserve at 

http://www.federalreserve

.gov/releases

. Locate the current rate on the fol-

lowing securities:

a. Prime rate

b. Federal funds

c. Commercial paper (financial)

d. Certificates of deposit

e. Discount rate

f. One-month Eurodollar deposits

Compare the rates for items a–c to those reported in

Table 11.1. Have short-term rates generally increased

or decreased?

2. The Treasury conducts auctions of money market

treasury securities at regular intervals. Go to