1. What is the T-Bill Face Value?

The face value of a Treasury bill (T-bill) is the amount that will be paid to the holder at maturity. T-bills are sold at a discount to face value, and the difference between purchase price and face value represents the interest earned.

2. How Does the Calculator Work?

The calculator uses the T-bill face value formula:

Where:

• \( \text{Purchase Price} \) — Price paid for the T-bill ($)
• \( \text{Yield} \) — Annualized yield (decimal form)
• \( \text{Days} \) — Days to maturity (maximum 360 days)

Explanation: The formula calculates how much the investment will be worth at maturity based on the purchase price and the yield over the holding period.

3. Importance of Face Value Calculation

Details: Knowing the face value helps investors understand their exact return at maturity and compare different T-bill investment options.

4. Using the Calculator

Tips: Enter the purchase price in dollars, yield in decimal form (e.g., 0.05 for 5%), and days to maturity (1-360). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is 360 days used instead of 365?
A: The money market convention for T-bills uses a 360-day year to simplify calculations.

Q2: How is this different from T-bill price calculation?
A: This calculates face value from price, while price calculation does the reverse - computes price from desired yield.

Q3: What's the minimum investment for T-bills?
A: The minimum purchase is $100 for Treasury bills purchased through TreasuryDirect.

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

Q5: Can I sell a T-bill before maturity?
A: Yes, T-bills can be sold on the secondary market, but the price will depend on current market yields.