During a tender for the issuance of Australian government bonds, the cumulative aggregate demand by bidders is the following: Yield Total cumulative aggregate demand (in AUD million face value) 1.20% 1,200 1.15% 1,050 1.10% 1.05% 950 900 1.00% 820 The Australian government is intending to sell AUD million 1,000 face value bonds using a variable discriminatory tender. The money of the issue will be paid on the Australian government account in Top Bank, an Australian commercial bank. a. b. c. d. Show the effect of this tender on the Australian governments balance sheet if the tender is successful. (2 marks) Determine the cut-off yield of the tender above. Explain in details the process you have followed to select the cut off yield. (2 marks) Calculate the ratio that will be used to calculate the allocation of government bonds to the bidders who bid the cut-off yield. Explain in details the process you have followed to calculate the ratio. (3 marks) Consider the following bids by 9 institutional investors (II): Yield in the bid Quantity in the bid (AUD million face value) 1.20% II1:100; II2: 50 1.15% II3: 40; II4: 60 1.10% II5: 30; II6: 20 1.05% II7: 80 1.00% II8: 420; II9: 400

During a tender for the issuance of Australian government bonds, the cumulative aggregate demand by bidders is the following: Total cumulative aggregate demand (in AUD million face Yield value) 1.20% 1,200 1.15% 1,050 1.10% 950 1.05% 900 1.00% 820 The Australian government is intending to sell AUD million 1,000 face value bonds using a variable discriminatory tender. The money of the issue will be paid on the Australian government account in Top Bank, an Australian commercial bank. Show the effect of this tender on the Australian government's balance sheet if the tender is successful. (2 marks) a. b. Determine the cut-off yield of the tender above. Explain in details the process you have followed to select the cut off yield. (2 marks) C. Calculate the ratio that will be used to calculate the allocation of government bonds to the bidders who bid the cut-off yield. Explain in details the process you have followed to calculate the ratio. (3 marks) d. Consider the following bids by 9 institutional investors (11): Yield in the bid 1.20% 1.15% 1.10% 1.05% 1.00% Quantity in the bid (AUD million face value) 111:100; 112:50 113: 40; 114: 60 115: 30; 116: 20 117: 80 118: 420; 119: 400 During a tender for the issuance of Australian government bonds, the cumulative aggregate demand by bidders is the following: Total cumulative aggregate demand (in AUD million face Yield value) 1.20% 1,200 1.15% 1,050 1.10% 950 1.05% 900 1.00% 820 The Australian government is intending to sell AUD million 1,000 face value bonds using a variable discriminatory tender. The money of the issue will be paid on the Australian government account in Top Bank, an Australian commercial bank. Show the effect of this tender on the Australian government's balance sheet if the tender is successful. (2 marks) a. b. Determine the cut-off yield of the tender above. Explain in details the process you have followed to select the cut off yield. (2 marks) C. Calculate the ratio that will be used to calculate the allocation of government bonds to the bidders who bid the cut-off yield. Explain in details the process you have followed to calculate the ratio. (3 marks) d. Consider the following bids by 9 institutional investors (11): Yield in the bid 1.20% 1.15% 1.10% 1.05% 1.00% Quantity in the bid (AUD million face value) 111:100; 112:50 113: 40; 114: 60 115: 30; 116: 20 117: 80 118: 420; 119: 400