= $1,000 - $1.3689 = $998.6311   The quoted yield on a bank discount basis is not a meaningful measure of the potential return from holding a Treasury bill, for two reasons. First, the measure is based on a face-value investment rather than on the actual dollar amount invested. Second, the yield is annualized according to a 360- day rather than a 365-day year, making it difficult to compare Treasury bill yields with Treasury notes and bonds, which pay interest on a 365-day basis. The use of 360 days for a year is a money market convention for some money market instruments, however. Despite its shortcomings as a measure of return, this is the method that dealers have adopted to quote Treasury bills. Many dealer quote sheets and some other reporting services provide two other yield measures that attempt to make the quoted yield comparable to that for a coupon bond and other money market instruments.   CD Equivalent Yield The CD equivalent yield (also called the money market equivalent yield) makes the quoted yield on a Treasury bill more comparable to yield quo- tations on other money market instruments that pay interest on a 360-day basis. It does this by taking into consideration the price of the Treasury bill (i.e., the amount invested) rather than its face value. The formula for the CD equivalent yield is     CD equivalent yield = 360Y ----------------------------- 360- t(Yd)     For example, using the data from Exhibit 3.3 for the 28-day bill that matures on April 11, 2002, the ask rate on a bank discount basis is 1.76%.TheCDequivalentyieldis computed as follows:   CDequivalentyield= 360(0.0176) - = 0.0176 = 1.76% --------------------------------------------- 360- 28(0.0176)     Because of the low rate, the CD equivalent yield is the same as the yield on a bank discount basis.