Are Treasury Bills and Treasury Bill ARM Indexes the same thing?
Treasury Bills are securities traded in the U.S. Treasury market. Reported Treasury Bill yields are used to construct different mortgage (ARM) indexes, including Treasury Bill indexes. Treasury Bills are traded in primary and secondary markets. Originally, they are auctioned directly by the U.S. government. This is their primary market (the market in which Treasury Bills are first issued). They are subsequently traded among investors in the secondary market. These markets determine a price for each Treasury Bill. Treasury Bill quotes are provided either in the form of an annualized discount rate percentage relative to the par value and a 360-day year, called the Discount Yield, or as a bond equivalent yield, which is relative to the price and a 365-day year*. * Some of these terms can be confusing. The Discount Yield is an annualized rate of return based on the par value of the bills and is calculated on a 360-day basis. The other name for the Discount Yield is: Discount Rate.
