The Bid Price of a T-Bill in the Secondary Market

question 21

Multiple Choice

The bid price of a T-bill in the secondary market is

• A) the price at which the dealer in T-bills is willing to sell the bill.
• B) the price at which the dealer in T-bills is willing to buy the bill.
• C) greater than the asked price of the T-bill.
• D) the price at which the investor can buy the T-bill.
• E) never quoted in the financial press.

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Definitions:

Margin

The difference between the selling price of a product or service and the cost associated with producing it, usually expressed as a percentage of sales.

Marginal Subcontracting Cost

The additional cost incurred for each unit of production outsourced to a third party, rather than produced in-house.

Layoff Cost

The financial impact associated with reducing a company's workforce, including severance pay, unemployment benefits, and potential legal costs.

Hiring And Training Cost

Expenses associated with recruiting new employees and providing them with the necessary training to perform their job.