Question

You are an investor in treasury notes. You placed a non-competitive bid for $15,000,000 worth of notes for a $45 billion auction. When the auction ended the highest rate was 4.373%, the median rate was 4.317%, and the lowest rate was 4.22%. Were you able to purchase any notes? If so, how much did you purchase? How much did you pay per $100 of face value?

Answer 1

As an investor in treasury notes, you were able to purchase $15,000,000 worth of notes at a rate of 4.373%. The price you paid per $100 of face value is 0.03333%.

Step-by-step explanation:

To determine if you were able to purchase any notes and how much you purchased, we need to compare the rate you bid with the rates in the auction. Since you placed a non-competitive bid, you will be awarded notes at the highest accepted rate, which in this case is 4.373%. This means you were able to purchase notes worth $15,000,000.

To calculate how much you paid per $100 of face value, we need to divide the amount you purchased by the face value of the notes. Treasury notes have a face value of $100, so we can calculate the price per $100 as follows:

Price per $100 = (Amount Purchased / Face Value) x 100 = ($15,000,000 / $45,000,000,000) x 100 = 0.03333%