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Let's tackle part 3(a) step by step:

### Part 3(a) (i):
**Distinguish between the bid price and the ask price.**

- **Bid Price**: This is the price that buyers are willing to pay for a security (like a T-bill).
- **Ask Price**: This is the price at which sellers are willing to sell the security.
  
In general:
- The **bid price** is lower than the **ask price**, which represents the spread or the transaction cost. The difference between the two prices allows dealers to make a profit from the spread.

### Part 3(a) (ii):
**Given**:  
- Bank discount yield on ask price = 6.81%  
- Bank discount yield on bid price = 6.9%  
- Maturity of the T-bill = 60 days  
- Par value = $100

**Formula for Price of T-bill using Bank Discount Yield (BDY)**:
\[
P = 100 \times \left( 1 - \frac{r_d \times t}{360} \right)
\]
Where:
- $ P $ is the price
- $ r_d $ is the bank discount yield (expressed as a decimal)
- $ t $ is the number of days to maturity

1. **Ask Price Calculation**:
   \[
   P_{\text{ask}} = 100 \times \left( 1 - \frac{0.0681 \times 60}{360} \right)
   \]
   \[
   P_{\text{ask}} = 100 \times \left( 1 - 0.01135 \right) = 100 \times 0.98865 = 98.865
   \]
   So, the **ask price** is **$98.87**.

2. **Bid Price Calculation**:
   \[
   P_{\text{bid}} = 100 \times \left( 1 - \frac{0.069 \times 60}{360} \right)
   \]
   \[
   P_{\text{bid}} = 100 \times \left( 1 - 0.0115 \right) = 100 \times 0.9885 = 98.85
   \]
   So, the **bid price** is **$98.85**.

### Part 3(a) (iii):
**Given**:
- Ask price = $98.00 per $100 par value
- Bid price = $97.95 per $100 par value
- T-bill is a 91-day bill

We are asked to draw a table that shows the quotation for this T-bill.

| Quotation | Bid Price | Ask Price |
|-----------|-----------|-----------|
| T-Bill    | $97.95    | $98.00    |

This table shows the bid and ask price of the 91-day T-bill.

---

This concludes part 3(a). Do you want further details on any of these solutions or have any questions? Here are some related questions you might consider:

1. How is the bid-ask spread related to market liquidity?
2. What factors influence the bid and ask prices of T-bills?
3. How is the bank discount yield different from the bond equivalent yield?
4. Why are T-bills sold at a discount rather than offering direct interest payments?
5. How does the maturity period affect the pricing of T-bills?

**Tip**: T-bills are short-term, low-risk investments that are priced at a discount. Their yield increases with shorter maturities or higher interest rates.

Learn how to calculate the bid and ask price for a T-bill with bank discount yields, using a step-by-step formula. This problem covers key concepts in fixed-income securities such as bid price, ask price, and the T-bill pricing formula. Suitable for college-level finance students.

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