Bank discount basis

Bank discount basis

A convention used for quoting bids and offers for Treasury bills in terms of annualized yield, based on a 360-day year.

Discount Yield

A way to quote the price for bonds. It is calculated as the annualized yield assuming a 360 day year. One calculates the discount yield thusly:

Discount yield = (Discount from par value / par value) * (360 / Days until maturity)

The discount yield is also called the discount basis or the bank-discount basis.