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bid-to-cover ratio

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Financial Dictionary

Bid-to-Cover Ratio

A ratio that compares the number of bids received in a Treasury security auction to the number of bids accepted.

Investopedia Commentary

A ratio above 2.0 indicates a successful auction comprised of aggressive bids. A low ratio is an indication of a disappointing auction, marked by a wide bid-ask spread.

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See also: Auction Market, Bid, Bid-Ask Spread, U.S. Treasury

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Financial Dictionary

bid-to-cover ratio

At an auction of Treasury securities, the dollar amount of money being bid compared with the dollar amount of securities being auctioned. A high ratio indicates strong demand and is likely to strengthen the market prices of other fixed-income securities.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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