1. What is the T-Bill Yield Calculation?

The T-Bill yield calculation estimates the return on investment for Treasury bills, which are short-term government securities. This calculation helps investors compare returns on T-bills with other investment options.

2. How Does the Calculator Work?

The calculator uses the T-Bill yield equation:

Where:

• \( Face\ Value \) — The amount paid at maturity (dollars)
• \( Purchase\ Price \) — The price paid for the T-bill (dollars)
• \( Days \) — Days to maturity (days)

Explanation: The equation calculates the annualized return based on the discount from face value and the time to maturity.

3. Importance of Yield Calculation

Details: Calculating yield helps investors assess the profitability of T-bills, compare different T-bill offerings, and make informed investment decisions.

4. Using the Calculator

Tips: Enter the face value (typically $100, $1000, etc.), the purchase price (less than face value), and the days to maturity. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use 360 days instead of 365?
A: The financial industry traditionally uses a 360-day year for T-bill yield calculations to simplify comparisons between different instruments.

Q2: What are typical T-bill maturities?
A: Common maturities are 4, 8, 13, 26, and 52 weeks, though other terms may be available.

Q3: How does this differ from bond yield?
A: T-bills are discount instruments (no periodic interest payments), while bonds typically pay regular interest.

Q4: Are T-bill yields taxable?
A: Yes, the difference between purchase price and face value is taxable as interest income at the federal level (but usually exempt from state/local taxes).

Q5: Where can I buy T-bills?
A: Directly from TreasuryDirect.gov, through banks, or via brokers.