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Ethics/Morals Videos 193 videos

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Selling away is the practice of selling securities that aren't under the seller's auspices to sell.

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Finance: What is the Bid-to-Cover Ratio? 11 Views


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Description:

What is the Bid-to-Cover Ratio? The Bid-to-Cover ratio compares the amount of bids made for Treasury securities to the amount that is actually sold. This ratio shows the demand for Treasury securities.

Language:
English Language

Transcript

00:00

Finance allah shmoop what is the bid to cover ratio

00:07

doesn't have to do with how much of the blanket

00:10

your loved one leaves you at night No that's bed

00:14

to cover ratio Totally different We're talking about a sentiment

00:17

index as it relates to us treasury bill auctions and

00:21

the overall health of the u s economy As you

00:25

hopefully remember us treasury securities air sold at a discount

00:29

to par pay no interest along the way and then

00:32

just pay full par at the end That is a

00:35

bid for a six month t bill might be a

00:38

nine hundred eighty eight dollars and twenty cents for a

00:40

piece of paper paying a thousand bucks in six months

00:44

We'll have the government come up with that nine hundred

00:46

eighty eight twenty number Was it from an act of

00:49

congress a mandate from the prez of bill no it

00:53

was set by bids from investors hoping to be ableto

00:57

buy that grand payable in six months for as cheap

01:00

a price as possible But once that bid number is

01:03

set well then the government decides it wants to sell

01:06

me x dollars worth of that particular security and the

01:09

price is set The government hopes that there are buyers

01:13

or bitters for that security paying some in two ish

01:16

percent and change an annualized returns Well if there are

01:19

tons of bidders at two percent it signals to the

01:22

government that next week well it can probably offer just

01:26

one point eight percent for that same paper all else

01:29

being equal and you know then they can raise as

01:31

much money as they want at that point Well if

01:33

there are scant few bidders well then it signals to

01:37

the g men that they might have to raise the

01:39

rent they pay on the money they're willing to borrow

01:42

here A two point once before do two point three

01:44

percent or something like that So the bid teo cover

01:47

ratio is the number of bids made divided by the

01:51

number of bids accepted or covered and it's a carefully

01:54

tracked number because it conveys a lot of market intelligence

01:58

about investor demand for us paper and you know generally

02:01

how healthy things are So to recap bid to cover

02:04

ratio bed to cover ratio on this would be a 00:02:08.09 --> [endTime] bed couch ratio

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