Series 7: 2.12.1.1 T-Bill Quotes

Taken from our Series 7 Top-off Online Guide

2.12.1.1  T-Bill Quotes

Because Treasury bills are issued at a discounted price and do not offer periodic interest payments, their quotes are different from those of Treasury bonds. Treasury bills are quoted as a bank discount yield. The bank discount yield is the annualized ratio of the bill’s discount to its face value. It is calculated as follows:

bank discount yield = face value – purchase price / face value	÷ days until maturity / 360

The yield represents the discount to par value the investor receives. A dealer will wish to buy at a larger discount and sell at a smaller discount. For this reason, when a T-bill spread is quoted, the bid will be higher than the ask. So you may see

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