1. What is T-Bill Monthly Value?

The monthly value of a Treasury bill (T-Bill) represents its current worth based on the face value, yield, and remaining days to maturity. This calculation helps investors understand the present value of their T-Bill investment.

2. How Does the Calculator Work?

The calculator uses the T-Bill valuation formula:

Where:

• \( Face\ Value \) — The amount paid at maturity (in dollars)
• \( Yield \) — The annualized discount yield (in decimal form)
• \( Days \) — Days remaining until maturity (1-360)

Explanation: The formula discounts the face value based on the yield and time remaining, using a 360-day year convention common for T-Bills.

3. Importance of T-Bill Valuation

Details: Accurate T-Bill valuation is crucial for investors to assess current investment worth, compare returns, and make informed buying/selling decisions in the secondary market.

4. Using the Calculator

Tips: Enter face value in dollars, yield as a decimal (e.g., 0.05 for 5%), and days to maturity (typically 28 to 364 days for T-Bills). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: Why use 360 days instead of 365?
A: The 360-day year is a banking convention used for T-Bills and many other money market instruments.

Q2: How does yield affect the monthly value?
A: Higher yields result in lower monthly values, as the discount rate increases.

Q3: What's the difference between price and yield?
A: Price is what you pay, yield is the annualized return. They move inversely to each other.

Q4: Can this be used for other securities?
A: This specific formula is designed for T-Bills. Other securities may use different day count conventions or compounding methods.

Q5: How often do T-Bill values change?
A: T-Bill values fluctuate daily with market interest rates. The yield changes at each auction for new issues.