BANKING & FINANCE - Nov. 21, 1995

Rates Fall on Short-Term T-Bills: Interest rates on short-term Treasury securities declined in auction. The Treasury Department sold $12.6 billion in three-month bills at an average discount rate of 5.34%, down from 5.43% last week. Another $12.6 billion worth of bills was sold in six-month bills at an average discount rate of 5.25%, down from 5.33%. The three-month bill rate is the lowest since they sold for 5.29% on Oct. 30. The six-month bill rate is the lowest since they averaged 5.22% on Sept. 18. The new discount rates understate the actual return to investors--5.50% for three-month bills with a $10,000 bill selling for $9,866.50 and 5.48% for a six-month bill selling for $9,736.00. In a separate report, the Federal Reserve Board said the average yield for one-year Treasury bills, the most popular index for making changes in adjustable rate mortgages, fell to 5.43% last week from 5.45% the previous week.