discount basis more comparable to yields on coupon Treasuries that use an actual/actual day count convention. Recall, the calculation of a bond equivalent yield depends on whether the discount instrument has 182 days or less to maturity or more than 182 days. If the maturity is 182 days or less, the calculation of the bond-equivalent yield is very straight- forward (see Chapter 3). Lets tackle the more involved case and consider a Reference Bill that has a maturity longer than 182 days. As discussed in Chapter 3, when a discount instrument like a Reference Bill has a current maturity of more than 182 days, converting a yield on a bank discount basis into a bond-equivalent yield is more involved. Specifi- cally, the calculation must reflect the fact that a Reference Bill does deliver cash flows prior to maturity while a coupon bond delivers coupon pay- ments semiannually and the semiannual coupon payment can be reinvested. As an example, lets use a 1-year Reference Bill. Exhibit 4.10 presents a Bloomberg YA screen for this Reference Bill issued on September 12, 2001. The price of this bill is 97.5271 (per $100 of face value). This bill matures on September 12, 2002 so as of September 20, 2001 (settlement date) there are 357 days to maturity. Since the year 2002 is a non-leap year, T = 365. Substituting this information in the expression above gives the bond-equivalent yield for this 1-year Reference Bill:   æ ö2   æ2´357 ö æ   100   ö¹ ₂ ----2-----´----3----5---7-- + 2 3----5---7-- è - è------------------- - 1ø´è1- ---------------------ø 365 365ø 365 97.5271 BEY = ------------------------------------------------------------------------------------------------------------------------------------------------ -----´-----3---5----7-- - 1 365   = 0.02577 = 2.577%       FEDERAL HOME LOAN BANK SYSTEM   The Federal Home Loan Bank System ("FHLBank System") is a GSE cre- ated by the U.S. Congress in 1932 whose mission is to support residential mortgage lending and related community investment through its member financial institutions. The System provides member institutions with access to low-cost funding, technical assistance, and special affordable housing     programs. As of mid-year 2001, member institutions numbered 7,822,