Explanation:
In a Dutch auction, the auctioneer starts with the highest asking price and lowers it until it reaches a point where the total number of shares offered equals or exceeds the number of shares to be sold.
Sorting the bids from highest to lowest price:
$45$44$43$42$40$36$35Cumulative shares:
$45: 2,500$44: 2,500 + 4,000 = 6,500$43: 6,500 + 3,000 = 9,500$42: 9,500 + 2,000 = 11,500 ✓ (exceeds 10,000)The price at which the cumulative shares first equal or exceed 10,000 is $42. So the shares are sold at $42.
Q.4887 The following table shows information about the bid and bidders in a Dutch Auction to sell 10,000 shares.
| Bidder | Number of Shares | Price (USD) |
|---|---|---|
| A | 1,500 | 40 |
| B | 1,000 | 36 |
| C | 2,500 | 45 |
| D | 3,000 | 43 |
| E | 4,500 | 35 |
| F | 2,000 | 42 |
| G | 4,000 | 44 |
At what price are the shares sold?
A
44
B
42
C
36
D
40
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