A customer places a competitive bid through a primary dealer for $10,000,000 of 91-day treasury bills at the weekly auction. The customer's bid wins. The settlement of the transaction will occur on the:

Question

Cordell Golden

Business

18 November, 01:05

A customer places a competitive bid through a primary dealer for $10,000,000 of 91-day treasury bills at the weekly auction. The customer's bid wins. The settlement of the transaction will occur on the:

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Answers (1)

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Patience Wilson · Answer 1

Thursday following the auction date

Explanation:

Treasury bills are instruments used by government to control liquidity in the economy by mopping up excess cash. They are secure government investments that are interest bearing.

T-bills are usually announced on Thursday, actioned on Tuesdays, and issued on the Thursday after auction.

So if the customer places a bid of $10,000,000 for the T-bills on auction day on Tuesday, the settlement of the transaction will occur on the Thursday following the auction date.