Title: Are US treasury bills underpriced in the primary market?
Abstract: Studies of securities markets have found that new issues of debt or equity tend to be underpriced in primary markets. We extend this research by examining the US Treasury bill market. The bill market provides an especially pure comparison of new and seasoned bill prices because when new bills are issued, identical securities are trading coincidentally in the secondary market. We find that it is cheaper to buy a bill in the primary market than to buy the same bill in the secondary market. We explain this 'underpricing' as a predictable consequence of auctiontheoretic and microstructural differences in the primary and secondary market mechanisms.
Publication Year: 1992
Publication Date: 1992-09-01
Language: en
Type: article
Indexed In: ['crossref']
Access and Citation
Cited By Count: 52
AI Researcher Chatbot
Get quick answers to your questions about the article from our AI researcher chatbot