BANKING & FINANCE - Dec. 27, 1995

Short-Term Rates Fall: Interest rates on short-term Treasury securities fell in auction to the lowest level in more than a year. The Treasury Department sold $13 billion in three-month bills at an average discount rate of 4.91%, down from 5.15% last week. Another $13 billion was sold in six-month bills at an average discount rate of 5.04%, also down from 5.15%. The three-month bill rate was the lowest since they sold for 4.79% on Sept. 26, 1994. The six-month bill rate was the lowest since they averaged 4.99% on Sept. 12, 1994. The new discount rates understate the actual return to investors--5.05% for three-month bills with a $10,000 bill selling for $9,875.90 and 5.26% for a six-month bill selling for $9,745.20.