What is the quotation method used for T-bills?

The correct method for quoting Treasury bills (T-bills) is the annualized discount percentage. T-bills are sold at a discount to their face value, and the amount of the discount is expressed as a percentage of the face value, annualized to make it easier for investors to understand the yield.

When T-bills are quoted, the discount is calculated based on the difference between the purchase price and the face value, with the calculation being standardized to reflect an annual yield despite the actual term of the bill being shorter than a year. This annualized discount percentage provides investors with a straightforward measure of the return they will earn when the T-bill matures.

This method is particularly useful because T-bills are typically short-term instruments (maturities of one year or less), and presenting the yield in annualized terms allows for easier comparison with other investments that may have different structures or time frames.

The other methods listed do not align with the standard practice for quoting T-bills, as they relate to different types of securities or calculation methodologies that do not apply to the discount pricing structure that defines T-bills.