T-bill yields are quoted on a(n)______ basis.
A)compound interest
B)after-tax
C)discount
D)none of the above

Question

Quizplus · Accepted Answer

T-bill yields are quoted on a discount basis, meaning the initial purchase price is less than the face value, and the difference between the two amounts represents the interest earned. This is different from compound interest, which accrues interest on both the initial investment and any previously earned interest. T-bill yields are also not quoted on an after-tax basis, as taxes are not factored into the yield calculation.

T-Bill Yields Are Quoted on A(n)______ Basis