Teaching Undergraduate Money and Banking: T-Bill Auctions and Stock Market Models

Abstract

The author offers innovative approaches to 3 topics that are typically only briefly mentioned (if at all) in money and banking courses. The first topic is a Treasury bill auction experiment in which students have an opportunity to participate directly. The results from a class of 14 money and banking students are used to explain how an instructor might conduct such an experiment in the classroom. Relatively simple algebraic models are also developed for 2 types of stock market transactions: short selling and margin buying. Three analytical exercises are presented with complete solutions to demonstrate how an instructor might assign related problems for students. These experiments and models give students a lasting understanding of a number of rarely discussed topics in money and banking courses.

Keywords:

• competitive bid
• margin buying
• quota
• short selling
• yield auction