Calculator For Treasury Bills

Treasury Bill Yield Formula:

\[ Yield = \frac{(Face\ Value - Purchase\ Price)}{Purchase\ Price} \times \frac{360}{Days\ to\ Maturity} \times 100 \]

Yield (%):

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1. What is Treasury Bill Yield?

Treasury Bill Yield represents the annualized return on investment for US Treasury bills, which are short-term government securities sold at a discount to their face value and maturing in one year or less.

2. How Does the Calculator Work?

The calculator uses the Treasury Bill Yield formula:

\[ Yield = \frac{(Face\ Value - Purchase\ Price)}{Purchase\ Price} \times \frac{360}{Days\ to\ Maturity} \times 100 \]

Where:

$ Face\ Value $ — The maturity value of the Treasury bill (USD)
$ Purchase\ Price $ — The price paid for the Treasury bill (USD)
$ Days\ to\ Maturity $ — Number of days until the bill matures
$ 360 $ — Standard number of days used in bank year calculations

Explanation: This formula calculates the discount yield, which annualizes the return based on a 360-day year, standard practice for US Treasury bills.

3. Importance of Treasury Bill Yield Calculation

Details: Accurate yield calculation is crucial for investors to compare returns across different Treasury bills, assess investment opportunities, and make informed decisions about short-term government securities.

4. Using the Calculator

Tips: Enter the face value and purchase price in USD, and the days to maturity. All values must be positive (face value > 0, purchase price > 0, days to maturity between 1-365).

5. Frequently Asked Questions (FAQ)

Q1: Why use 360 days instead of 365?
A: The 360-day year is a banking convention used for Treasury bill calculations to standardize comparisons across different maturity periods.

Q2: What is the typical face value of Treasury bills?
A: Treasury bills are typically issued with face values of $1,000, $5,000, $10,000, $25,000, $50,000, $100,000, and $1 million.

Q3: How does this differ from bond yield calculations?
A: Treasury bill yields use discount yield calculation, while bonds typically use yield to maturity calculations that account for coupon payments.

Q4: What are current Treasury bill yield ranges?
A: Yields vary with market conditions, but typically range from 0.5% to 5% depending on maturity length and economic environment.

Q5: Are Treasury bill yields taxable?
A: Yes, the interest income from Treasury bills is subject to federal income tax but exempt from state and local taxes.