G sec auctions

Question 1

What govt did before auctions

Answer 1

Govt used to fix the coupons now based on auctions market decides the interest rate

Question 2

Yield based auction and when issued

Answer 2

Bids are arranged in ascending order and cutoff is determined based in the amount required

It is used for new issue

Question 3

Price based auction and when issued

Answer 3

Bids are arranged based on the descending order of prices and cutoff is determined based on the amount needed

For re-issue of securities which are already issued

Question 4

Uniform price vs multiple price basis

Answer 4

Uniform price where all bidders pay same price

Multiple price where bidders pay as per the price they bid

Question 5

Competitive bidding

Answer 5

Based on the bids

Minimum is Rs 10000 and then multiples of 10000

Multiple visa aee allowed from investors

Question 6

Non competitive bidding

Answer 6

Mainly to encourage the retail investor participation such as individuals, firms, companies, corporate bodies, provident funds, trusts

Single bid

Question 7

Switch of securities

Answer 7

2019, 3rd Monday of every monday

Agree to sell securities and buy at same quoted price