The Price That Competitive and Noncompetitive Bidders Will Pay at a Treasury

question 13

Multiple Choice

The price that competitive and noncompetitive bidders will pay at a Treasury bill auction is the

• A) highest price entered by a competitive bidder.
• B) highest price entered by a noncompetitive bidder.
• C) lowest price entered by a competitive bidder
• D) equally weighted average price paid by all competitive bidders whose bids were accepted.
• E) none of the above

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Definitions:

Debtors

Individuals or entities that owe money to another party, typically as a result of borrowing funds.

Nominal Rate

The interest rate as stated without adjusting for inflation, representing the actual percentage that borrowers pay and lenders receive.

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the true return on investment.

Nominal Interest Rate

The stated rate of interest on a loan or financial investment, not adjusted for inflation.