BANKING & FINANCE - Jan. 23, 1996

Short-term T-Bill Rates Drop: The Treasury Department sold $11.5 billion in three-month bills at an average discount rate of 4.99%, down from 5.02% last week. Another $11.6 billion was sold in six-month bills at an average discount rate of 4.88%, down from 4.93%. The three-month bill rate was the lowest since it averaged 4.91% on Dec. 26. The six-month bill rate was the lowest since it averaged 4.75% on Aug. 1. The new discount rates understate the actual return to investors: 5.14% for three-month bills, with a $10,000 bill selling for $9,873.90, and 5.09% for a six-month bill selling for $9,753.30. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills fell to 5.03% last week from 5.17% the previous week.