Which one of the following statements is correct concerning a Treasury bill?
A)The asked discount indicates the amount a bond dealer is willing to pay to purchase a Treasury bill.
B)The asked yield on a Treasury bill is a bond equivalent yield.
C)The asked discount for a Treasury bill is greater than the bid discount.
D)The asked yield for a Treasury bill is computed based on a 360-day year.
E)The bid price on a Treasury bill is computed based on a 365-, or 366-day year.

Question

Quizplus · Accepted Answer

The asked yield on a Treasury bill is a bond equivalent yield, which is calculated on a 365-day basis. The asked discount represents the amount an investor can purchase the bill for less than its face value, and it is typically lower than the bid discount. The bid and asked prices for Treasury bills are quoted in terms of their discount from face value, and they are not computed based on a specific year basis.

Which One of the Following Statements Is Correct Concerning a Treasury