Actuarial Outpost
Go Back   Actuarial Outpost > Exams - Please Limit Discussion to Exam-Related Topics > SoA > Fellowship Modules
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

DW Simpson
Actuarial Jobs

Visit our site for the most up to date jobs for actuaries.

Actuarial Salary Surveys
Property & Casualty, Health, Life, Pension and Non-Tradtional Jobs.

Actuarial Meeting Schedule
Browse this year's meetings and which recruiters will attend.

Contact DW Simpson
Have a question?
Let's talk.
You'll be glad you did.

Thread Tools Search this Thread Display Modes
Old 11-21-2001, 03:45 AM
question question is offline
Join Date: Oct 2001
Posts: 214

I am not quite understand how the auction market works. Can anyone tell me how it work? Also, how does the "Single-price" work? Why do all bidders award at the higest yield (lowest price) not the highest price? In this way, bidders will only offer low price not high price, which is the opposite of a fair market, i.e. only the highest price will get?
Reply With Quote
Old 11-21-2001, 12:16 PM
Exam Slave Exam Slave is offline
Join Date: Sep 2001
Posts: 209

Since this has been used in MC questions, it's of some importance. It can be used in a WA question, but I think there are more difficult areas.
The stop-out yield is not the highest yield bid. It is determined as follows:
1. Treasury decides how much to sell; say $10 million.
2. Non-Competitive bidders are in, without regard for the yield. Say $4 million in non-competitive bids are tendered.
3. That leaves $6 million to the competitive bids. Suppose there are five competing bids of $2 million each.
4. Only three competitive bids are accepted. The two bids with the highest yield are out.
5. The highest yield of the remaining three competitive bids is the yield for all $10 million.

There is a risk of being shut out and having to pay a higher price for these securities. So, the competitive bidders have to think a little more.
Reply With Quote
Old 11-21-2001, 01:42 PM
aNoNo aNoNo is offline
Join Date: Sep 2001
Posts: 226

ES - thanks for the clear explanation.

Have you been through the Course 6 material before? You seem to be on top of things in mid-November for a spring exam.
Reply With Quote
Old 11-21-2001, 02:17 PM
Exam Slave Exam Slave is offline
Join Date: Sep 2001
Posts: 209

Back to the coal mines.
I have no past, I have no future. I am, "Exam Slave."

Best I can do on my 5-second bathroom break.
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

All times are GMT -4. The time now is 02:34 AM.

Powered by vBulletin®
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.26639 seconds with 11 queries