Question

The Cookie Co. would like to sell 500 shares of stock using the Dutch auction method. The bids received were Bidder A, 200 shares at $40; Bidder B, 300 shares at $39; Bidder C, 500 shares at $38; and Bidder D, 400 shares at $37. What will be the gross proceeds from this auction

Answer 1

Answer:

$19,700

Explanation:

The total proceeds from the auction will be calculated as follows:

A. 200 shares for $40 = 200 shares * $40 = $8,000

B. 300 shares for $39 = 300 shares * $39 = $11,700

This makes a total of 500 shares at a total proceeds of $19,700

In Dutch auction method rate per share is noted by the auctioneers to calculate the highest proceeds which can be generated through the auction. The bid from the highest rate are entertained first and in this case bidder A and B are selected.