BANKING & FINANCE - Aug. 29, 1995

T-Bill Interest Rates Fall: The Treasury Department sold $12.1 billion in three-month bills at an average discount rate of 5.34%, down from 5.43% last week. Another $12.1 billion was sold in six-month bills at an average discount rate of 5.34%, also down from 5.43%. The three-month bill rate is the lowest since they sold for 5.29% on Nov. 14. The six-month bill rate is the lowest since 5.30% on July 10. The new discount rates understate the actual return to investors--5.50% for three-month bills, with a $10,000 bill selling for $9,865, and 5.58% for a six-month bill selling for $9,730. In a separate report, the Federal Reserve said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable rate mortgages, fell to 5.81% last week from 5.86% the week before.