Nepal Rastra Bank has Rs 100 million in 91-day T-bills to sell. It receives many non-competitive bids and competitive bids. Out of total issue of…
BBA Financial Markets and Services · 2025 · Solved Question with Answer
Nepal Rastra Bank has Rs 100 million in 91-day T-bills to sell. It receives many non-competitive bids and competitive bids. Out of total issue of T-bill, 15% is allocated for non-competitive bidders and remaining 85% is differentiated for competitive bidders. The face value of Treasury bills is Rs 100 and minimum denomination is Rs 50,000. The auction is the American Auction system. The five competitive bids receive by Nepal Rastra Bank are given below.
| Bidder | Bid Amount | Price |
| 1 | Rs 30 million | Rs 96 |
| 2 | Rs 30 million | Rs 95 |
| 3 | Rs 20 million | Rs 94 |
| 4 | Rs 10 million | Rs 93 |
a. What quantity of Treasury bills will receive by non-competitive bidders? Who will receive T-bills and at what price?
b. What quantity of T-bills will receive by competitive bidders? Who will receive T-bills and at what price?
c. Calculate the discount yield and bond equivalent yield of bidder 1.