1. What is Treasury Bill Yield?

Treasury Bill (T-bill) yield represents the return on investment for short-term government securities. It's calculated based on the discount between the face value and purchase price, annualized using a 360-day year.

2. How Does the Calculator Work?

The calculator uses the T-bill yield formula:

Where:

• \( Face \) — Face value of the T-bill ($)
• \( Purchase \) — Purchase price of the T-bill ($)
• \( Days \) — Days to maturity
• \( 360 \) — Standard banking days in a year

Explanation: The formula calculates the discount yield, which is the percentage return based on the discount from face value and the time to maturity.

3. Importance of T-bill Yield Calculation

Details: Accurate T-bill yield calculation is crucial for investors to compare returns across different maturities and make informed investment decisions in government securities.

4. Using the Calculator

Tips: Enter face value and purchase price in dollars, days to maturity (1-360). Purchase price must be less than face value to calculate a positive yield.

5. Frequently Asked Questions (FAQ)

Q1: Why use 360 days instead of 365?
A: The 360-day year is a banking convention used for calculating yields on short-term money market instruments like T-bills.

Q2: What are typical T-bill maturities?
A: T-bills typically mature in 4, 8, 13, 26, or 52 weeks (28, 56, 91, 182, or 364 days).

Q3: How does T-bill yield compare to other investments?
A: T-bill yields are generally lower than other investments but offer high liquidity and virtually no credit risk.

Q4: Are T-bill yields taxable?
A: T-bill interest is exempt from state and local taxes but subject to federal income tax.

Q5: What is the minimum investment in T-bills?
A: The minimum purchase is typically $100 for new issues bought through TreasuryDirect.