Calculate the allocation of government bonds

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When the Australian government issues government bonds during a tender, the cumulative aggregate/total  demand by bidders is the following:

Yield

Total cumulative aggregate demand (in AUD million face value)

2.20%

2,200

2.15%

2,050

2.10%

1,950

2.05%

1,900

2.00%

1,820

The Australian government is intending to sell AUD million 2,000 face value bonds using a variable discriminatory tender. The money of the issue will be paid on the Australian government account in the RBA, Australia's central bank.

Calculate the ratio that will be used to calculate the allocation of government bonds to the bidders who bid the cut-off yield. Explain in details the process you have followed to calculate the ratio.

Reference no: EM133254086

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