Generating optimal true interest cost bids for new municipal bond competitive issues |
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| Affiliation: | 1. Guangdong Open Laboratory of Geospatial Information Technology and Application, Guangzhou Institute of Geography, Guangzhou 510070, China;2. Key Lab of Guangdong for Utilization of Remote Sensing and Geographical Information System, Guangzhou 510070, China;3. College of Global Change and Earth System Science, Beijing Normal University, Beijing 100875, China;4. Chinese Academy of Sciences, Institute of Geographical Sciences and Natural Resources Research, Beijing 100101, China;5. School of Environmental Science and Engineering, Southern University of Science and Technology, Shenzhen, 518055, China;6. Chinese Research Academy of Environmental Sciences, Beijing 100012, China;1. Gatton College of Business and Economics, University of Kentucky, Lexington, KY 40506, USA;2. Richard A. Chaifetz School of Business, Saint Louis University, St. Louis, MO 63108, USA;1. Jiangxi University of Finance and Economics, Nanchang, 330013, Jiangxi China;1. 246 Mendoza College of Business, Department of Finance, University of Notre Dame, Notre Dame, IN 46556, USA;2. College of Business, Department of Finance, University of Illinois at Chicago, 601 South Morgan Street, Chicago, IL 60607-7121, USA |
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| Abstract: | In 1984 over $95 billion of new tax-exempt debt issues were sold to the public. A criterion for judging competitive bids which is enjoying an increase in usage is that of minimizing true interest cost (internal rate of return). The true interest cost bidding problem may be formulated as a non-linear integer program. By utilizing a novel linearization in concert with a special purpose integer programming algorithm, minimum true interest cost bids can be generated in a matter of seconds. Computational results from an actual bidding problem are presented. |
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