1. Suppose in a Treasury auction, the stop out yield was 3%. After all lower competitive bidders had been given their allocation, there remains $4 billion tendered at the highest bid but the treasury only has $3 billion worth of securities left in the batch. In this example, a dealer had tendered for $5 million at a 3% yield. Will he receive any allocation? If yes, how much, in dollar amount, would this dealer receive? If no, explain clearly why not

2. Suppose that $500 million of a 10 year fixed principal treasury note with a coupon rate of 5% is purchased by a dealer firm to create 0 coupon treasury securities. What are the FVs on each of the zero-coupon securities?