Issuing procedure - t-bills, Financial Management

Assignment Help:

Issuing Procedure

Treasury bills are sold using the auction procedure. The Treasury entertains both competitive and non-competitive tenders for T-Bills. Government securities firms, individuals, financial and non-financial companies usually participate in the bidding. In competitive bids, the quantity of desired T-bills are specified with lowest interest rates which the buyer is willing to accept. (However, treasury rules prohibit any single bidder from obtaining more than 35 percent of any new issue.) The competitive tenders are typically submitted by large investors, banks and securities dealers. The non-competitive bids are submitted by small investors and their bidding amount is limited to $1 million or less. A non-competitive bidder accepts the weighted average interest rate of the competitive bids and these bids state only the quantity of bills desired.

in UK, all new issues are scheduled and are made through auctions with the details being announced in advance. Private investors may bid for gilts at auctions on a non-competitive basis and receive the gilt at the weighted average of the price paid by successful competitive bidders. The minimum for this type of application is 1000 nominal of the gilt and the maximum is 500,000. Investors making non-competitive bids at the auction are asked to enclose a cheque for a specified amount per 100 nominal bid for. If the eventual price is less, the difference is refunded - if greater, a further payment will be asked for.

 


Related Discussions:- Issuing procedure - t-bills

What are the types of theft threats, What are the types of theft threats?  ...

What are the types of theft threats?  Describe the methods to access and overcome theft threats. Types of theft threats - Mass theft, Pilferage theft. Steps to assess threats

Primary market, Primary Market In an economy, at a given point of time, ...

Primary Market In an economy, at a given point of time, there will be people/entities called savers the surplus units, whose current income exceeds their current expenditure whi

Explain why preferred stock is similar to debt than equity, Question: a...

Question: a. Le Mustang company Ltd is foreseeing a growth rate of 15 per cent per annum in the next three years. It is likely to fall to 12 per cent in the fourth year. Afte

Types of rating - shadow rating, The issuer will not have to disclose...

The issuer will not have to disclose the rating to the public. The firm can, either independently or with the help of its investment banker, assess its shadow

Explain the term - timing of benefits, Explain the term - Timing of Benefit...

Explain the term - Timing of Benefits A more significant technical objection to profit maximisation, as a guide to financial decision making, is that it ignores the differen

Difference between mortgage bond and a debenture, Difference between mortga...

Difference between mortgage bond and a debenture? A mortgage bond is a secured bond whereas a debenture is an unsecured bond.

What is current asset, Q. What is Current Asset? Current Asset - ASSET ...

Q. What is Current Asset? Current Asset - ASSET which one can reasonably expect to convert into cash, sell or consume in operations within a single operating cycle or within a

Investor invest lion’s share of fund in domestic securities, Why do investo...

Why do investors invest the lion’s share of their funds in domestic securities? Answer: Investors invest greatly in their domestic securities since there are major barriers to in

Profit center, Profit Center A separate unit or department within an or...

Profit Center A separate unit or department within an organization that is responsible for its own revenues, costs, and there profit. Profit center managers are commonly free t

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd