# How do treasury bill auction work?

So i am having a couple of issues understanding the auctions of treasury bills.

I know that the treausury accepts the bids offering the highest price. The treausury accepts the competitive bids in ascending order of yield until the accepted bid reaches the offering amount. Each accepted bid is then awarded at the highest yield paid to any accepted bid.

So now i have an example with the explanation that this website provides:

I do not understand why it says: All bids above the 5.07% rate will be accepted, and bids below will be rejected.

First it's saying that bids up to 5.07 will be accepted and now its saying that it will reject bids below 5.07? What am i missing?

In another example:

Here it actually makes sense: bidders 1, 4 and 5 will get the t bill since they are paying the highest price.

So what am i missing?

• It should be fairly obvious that lower interest rates correspond to higher bids (i.e. smaller discounts to par) to buy the Treasury Bids. The lower-interest bids accepted proposed higher bid values of the Treasury Bill. It seems that "All bids above the $5.07\%$ rate" mean those bid values above the clearing price which corresponds to $5.07\%$. You accept the same interpretation for the clearer second example; the first is not well written but this interpretation works – Henry Oct 10 '19 at 21:25