US Treasury Bill Calculator

T-Bill Price Formula:

\[ Price = \frac{Face\ Value}{1 + Yield \times \frac{Days}{360}} \]

T-Bill Price:

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1. What is US Treasury Bill Calculator?

The US Treasury Bill Calculator computes the discount price of Treasury bills based on face value, yield, and days to maturity. T-bills are short-term government securities that are sold at a discount and mature at face value.

2. How Does the Calculator Work?

The calculator uses the T-bill discount price formula:

\[ Price = \frac{Face\ Value}{1 + Yield \times \frac{Days}{360}} \]

Where:

\( Face\ Value \) — The maturity value of the T-bill (currency)
\( Yield \) — The annualized discount yield (decimal)
\( Days \) — Days to maturity (days)
\( 360 \) — Day count convention for T-bills

Explanation: The formula calculates the present value of the T-bill by discounting the face value at the given yield over the specified time period using a 360-day year convention.

3. Importance of T-Bill Price Calculation

Details: Accurate T-bill pricing is essential for investors, financial institutions, and traders to determine fair market value, calculate returns, and make informed investment decisions in government securities.

4. Using the Calculator

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 valid (face value > 0, yield ≥ 0, days between 1-360).

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between T-bill price and face value?
A: T-bills are sold at a discount to face value. The price is what you pay now, while face value is what you receive at maturity.

Q2: Why is 360 days used instead of 365?
A: The 360-day year is a banking convention used for T-bills and other money market instruments for simplified interest calculations.

Q3: How is T-bill yield different from coupon yield?
A: T-bills are zero-coupon instruments, so yield represents the discount rate rather than periodic interest payments.

Q4: What are typical T-bill maturities?
A: T-bills typically have maturities of 4, 8, 13, 26, or 52 weeks (28, 56, 91, 182, or 364 days).

Q5: Are T-bill prices affected by interest rate changes?
A: Yes, T-bill prices move inversely to interest rates - when rates rise, T-bill prices fall, and vice versa.