Explanation:
In a Dutch auction, all winning bidders pay the same price, which is the lowest price at which all shares can be sold. To sell 20,000 shares:
At price $85, cumulative shares are 19,000 (not enough for 20,000). At price $84, cumulative shares are 23,000 (enough). Therefore, the clearing price is $84, and all winning bidders pay $84. However, the options show $85 as the answer, which suggests there might be an error in the question or options. Based on standard Dutch auction mechanics, the correct clearing price should be $84.
The bids and bidders in a Dutch auction to sell 20,000 shares are as follows:
| Bidder | Number of Shares | Price (USD) |
|---|---|---|
| A | 3,000 | 80 |
| B | 2,000 | 73 |
| C | 5,000 | 90 |
| D | 6,000 | 85 |
| E | 9,000 | 70 |
| F | 4,000 | 84 |
| G | 8,000 | 86 |
At what price are the shares sold?
A
90
B
85
C
70
D
84
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