Home
Back
Treasury Bill Price Formula:
| From: | To: |
Treasury Bill Price Calculation determines the discount price of a T-bill based on its face value, yield, and days to maturity. Treasury bills are short-term government securities sold at a discount to face value.
The calculator uses the Treasury Bill pricing formula:
Where:
Explanation: The formula calculates the present value of the T-bill by discounting the face value at the given yield over the specified period using a 360-day year convention.
Details: Accurate T-bill pricing is essential for investors, financial institutions, and government agencies to determine fair market value, calculate returns, and make informed investment decisions in the money market.
Tips: Enter face value in currency units, yield as a decimal (e.g., 0.05 for 5%), and days to maturity. All values must be positive and within reasonable ranges.
Q1: Why use 360 days instead of 365?
A: The 360-day year is a money market convention that simplifies interest calculations for short-term instruments like Treasury bills.
Q2: What is the difference between price and yield?
A: Price is what you pay for the T-bill, while yield is the annualized return you earn. They have an inverse relationship.
Q3: Can this calculator be used for other money market instruments?
A: While the formula is specific to T-bills, similar discount pricing principles apply to other short-term debt instruments, though day count conventions may vary.
Q4: How does maturity affect T-bill price?
A: Longer maturities generally result in lower prices (higher discounts) for the same yield, as the discount is applied over a longer period.
Q5: What are typical T-bill denominations?
A: Treasury bills are typically issued in denominations of $1,000, $5,000, $10,000, $25,000, $50,000, $100,000, and $1 million.