标题: Fixed income treasuries issuing [打印本页] 作者: FVPV 时间: 2013-4-8 15:01 标题: Fixed income treasuries issuing
CFA Practice Problems Reading 64 Fixed Income Page 339
Question 3 a:
What is the difference between a singleprice auction and a multipleprice auction?
CFA answer:
In a singleprice auction, all winning bidders are awarded securities at the highest yield bid. In a multipleprice auction, all winning bidders are awarded securities at the yield they bid.
Why the heck would the central government award the securities at the highest yield bid? Wouldn’t you want issue at the highest price bid (lowest yield)? This certainly does not make sense to me.作者: Colum 时间: 2013-4-8 15:01
This is a bit more complicated.
You have broadly two groups of bidders. One who bid by specifying the yield they expect. And another that wants to buy a certain $ amt. (competitive vs noncompetitive).
The ‘noncompetitive’ bidders will be able to get the bills/notes etc. at the price decided (best yield) from among the competitive bidders. There are restrictions as to how much you can buy as a noncompetitive bidders, since they will always be a “winner” in the auction (like 5Million$).
Keep in mind, this is not how normal auctions work.
