A:

Yes, you are correct that the ask price of a security should typically be higher than the bid price. This is because people will not sell a security (asking price) for lower than the price they are willing to pay for it (bidding price). So, because there is more than one method of quoting the bid and ask prices of T-bills, the quoted ask price may simply be perceived as being lower than the bid.

For example, one common quote that you may see for a 365-day T-bill is July 12th, bid 5.35%, ask 5.25%. At first glance, the bid seems higher than the ask, but upon further inspection, you can see that the ask is actually higher. The reason is that a T-bill is a discount bond and these percentages are the quoted yields, not the actual prices. So, if we convert the bid and ask discount yields into the dollar amounts of the prices, we get a bid of \$94.65 and an ask of \$94.75. Therefore, the bid is actually lower than the ask. Sometimes the quotes on T-bills show the actual prices, in which case you don't have to convert or calculate anything. The same T-bill above, therefore, may be quoted with a bid of 94.65 and an ask of 94.75.

So, as the dollar amount of the bid should be lower than the ask, the bid's quoted yield percentage should be higher than the ask's quoted yield percentage - the two different kinds of quotes are just different ways of saying the same thing.

RELATED FAQS
1. ### What do the numbers that follow the bid and ask numbers in stock quotes represent? ...

When looking at stock quotes, there are numbers following the bid and ask prices for a particular stock. These numbers usually ... Read Answer >>
2. ### How do I buy treasury bills?

Discover how Treasury Bills (T-bills) are a safe-bet investment for short-term returns. The percentages on the returns vary. Read Answer >>

4. ### What is the difference between a quote driven market and an order driven one?

The difference between these two market systems lies in what is displayed in the market in terms of orders and bid and ask ... Read Answer >>
5. ### What factors influence the price of treasury bills?

Take a deeper look at some of the factors that influence the prices of Treasury bills, such as monetary policy set by the ... Read Answer >>
Related Articles
1. Investing

### Negotiating the Bid

A bid is an offer investors make to buy a security.
2. Investing

### How To Read A T-Bill Quote

If you want buy and sell US Treasury bills, you need to learn to read the quotes.
3. Investing

### What Does Bid And Asked Mean?

Bid and asked is a two-way price quotation.
4. Investing

### Understanding Gold Quote Prices

Willing to trade gold but puzzled by gold price quotes and terminology? Investopedia explains how to read gold price quotes.
5. Investing

### What's a T Bond?

Treasury bonds, or T-bonds, are marketable securities issued by the US government, and are available in increments of \$100. Bonds have a maturity range of ten to 30 years, with 30 being the most ...
6. Personal Finance

### How The Auction Market Works

Here's a look into the online auction market and how to get yourself the best value possible on sites like eBay and Quibids.
7. Investing

### How To Create A Real Estate Bidding War

There are still many areas in the United States that are attractive enough to buyers that you can start a good, old-fashioned bidding war on your property.
RELATED TERMS
1. ### Best Bid

The highest quoted bid for a particular trading instrument among ...
2. ### Bid Tick

An indication of whether the latest bid price is higher, lower ...

The lowest quoted offer price among all those offered by competing ...
4. ### Bid Whacker

A slang term for an investor who sells shares at or below the ...
5. ### Quote

1. The last price at which a security or commodity traded, meaning ...
6. ### Two-Way Quote

A type of quote that gives both the bid and the ask price of ...
Hot Definitions
1. ### Net Profit Margin

Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
2. ### Gross Margin

A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
3. ### Current Ratio

The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
4. ### SEC Form 13F

A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
5. ### Quantitative Easing

An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
6. ### Risk Averse

A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...