1. What is the T-Bill Yield Calculator?

The T-Bill Yield Calculator calculates the yield of a Treasury bill based on its face value, purchase price, and days to maturity. It uses the standard bank discount yield formula commonly used for T-bills.

2. How Does the Calculator Work?

The calculator uses the T-Bill yield formula:

Where:

• \( Face\ Value \) — The amount paid at maturity (typically $1,000, $5,000, etc.)
• \( Purchase\ Price \) — The price paid for the T-bill
• \( Days \) — Days until maturity
• 360 — Standard number of days used in bank discount yield calculations

Explanation: The formula calculates the annualized return based on the discount from face value, using a 360-day year as is standard for money market instruments.

3. Importance of T-Bill Yield Calculation

Details: Calculating T-Bill yield helps investors compare returns across different T-bills and with other short-term investments. It's essential for investment decision-making and portfolio management.

4. Using the Calculator

Tips: Enter the face value (typically $1,000 for T-bills), the purchase price (what you paid), 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 360-day year is standard for bank discount yield calculations in the money market, making yields comparable across instruments.

Q2: What's the difference between discount yield and bond equivalent yield?
A: Discount yield uses 360 days and the face value as denominator, while bond equivalent yield uses 365 days and the purchase price.

Q3: Are T-bill yields taxable?
A: T-bill yields are subject to federal income tax but exempt from state and local taxes.

Q4: What are typical T-bill maturities?
A: Common maturities are 4-week, 8-week, 13-week (3-month), 26-week (6-month), and 52-week (1-year).

Q5: How often are T-bills issued?
A: The U.S. Treasury issues new T-bills weekly (4-week, 8-week, 13-week, 26-week) and monthly (52-week).