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Finance allah shmoop what is the bid to cover ratio

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

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

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

index as it relates to us treasury bill auctions and

the overall health of the u s economy As you

hopefully remember us treasury securities air sold at a discount

to par pay no interest along the way and then

just pay full par at the end That is a

bid for a six month t bill might be a

nine hundred eighty eight dollars and twenty cents for a

piece of paper paying a thousand bucks in six months

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

eighty eight twenty number Was it from an act of

congress a mandate from the prez of bill no it

was set by bids from investors hoping to be ableto

buy that grand payable in six months for as cheap

a price as possible But once that bid number is

set well then the government decides it wants to sell

me x dollars worth of that particular security and the

price is set The government hopes that there are buyers

or bitters for that security paying some in two ish

percent and change an annualized returns Well if there are

tons of bidders at two percent it signals to the

government that next week well it can probably offer just

one point eight percent for that same paper all else

being equal and you know then they can raise as

much money as they want at that point Well if

there are scant few bidders well then it signals to

the g men that they might have to raise the

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

here A two point once before do two point three

percent or something like that So the bid teo cover

ratio is the number of bids made divided by the

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

tracked number because it conveys a lot of market intelligence

about investor demand for us paper and you know generally

how healthy things are So to recap bid to cover

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