What does a competitive bid in a Treasury bond auction specify?

In a Treasury bond auction, a competitive bid allows a bidder to specify both the price they are willing to pay for the bonds and the dollar amount of securities they wish to purchase. This means that the bidder participates in the auction with a clear intention of how much they are willing to offer for each bond and how many bonds they want to acquire. It provides more control over the outcomes compared to non-competitive bids, which do not involve price specification.

The competitive nature of this bid is important because it allows bidders to influence the interest rate and total cost they will incur. If the price they specify is accepted, they will receive the securities at that price, provided they are among the successful bidders based on their price and the total demand during the auction.

In contrast, other options do not encapsulate the full nature of competitive bidding in Treasury auctions. They either limit the information to just dollar amounts or prices, missing the critical element of the combined specification which is what sets competitive bids apart. Therefore, the correct answer centers around the capacity to declare both the price and the dollar amount, reflecting the fundamental mechanics of competitive bidding in these auctions.