1. The U.S. Treasury wants to issue $36 billion of 91-day Treasury bills. There are $4 billion of noncompetitive bids and $64 billion of competitive bids. The competitive bids are as follows: $4 billion at 4.25%; $8 billion at 2.75%; $13 billion at 3.50%; $11 billion at 4.00%; $6 billion at 3.25%; $4 billion at 3.00%; $7 billion at 3.75%; and $10 billion at 2.50%. Answer the questions below and explain your answers.

1. What will be the highest rate accepted and paid to all successful bidders?

2. What would be the bond-equivalent yield (investment rates) paid to all successful bidders?

3. What is the price to six decimal places for the newly issued 91-day Treasury bills?

4. If an investor placed a bid at the highest rate accepted, how much was the investor allotted at the high rate?

5. If small investors with less than $30,000 of funds want to guarantee their bids are accepted, what type of bid should they submit? Explain your answer.

6. If large investors with more than $5 million of funds want to guarantee their bids are accepted, what type of bid should they submit? Explain your answer.