What is the best description of government bills in terms of quoting?

Government bills, specifically Treasury bills (T-bills), are short-term debt obligations issued by the U.S. Treasury that are sold at a discount to face value. This means that they do not pay interest in the traditional sense; instead, the return on investment is realized when the bill matures, at which point the investor receives the full face value.

The correct answer describes that T-bills are quoted based on the yield, which is determined using a discounted yield basis. This method emphasizes the discount from the face value and calculates the annualized yield based on that discount, which helps investors understand the effective return on their investment relative to the time until maturity.

This approach in quoting is designed to provide a clear understanding of the potential earnings from these instruments, distinguishing them from other debt securities such as bonds, which are typically quoted based on their par value or interest payments.