1. What is T-Bill Yield?

The T-Bill Yield represents the annualized return on investment for U.S. Treasury bills, which are short-term debt obligations issued by the U.S. government. It's calculated based on the discount from face value and the time to maturity.

2. How Does the Calculator Work?

The calculator uses the T-Bill Yield equation:

Where:

• \( Price \) — Price per $100 of face value (USD)
• \( Days \) — Days to maturity
• \( 360 \) — Standard number of days used in the year for T-Bill calculations

Explanation: The equation converts the discount from face value into an annualized percentage yield using a 360-day year convention.

3. Importance of T-Bill Yield Calculation

Details: Calculating T-Bill yield is essential for investors to compare returns across different T-Bill maturities and against other short-term investments. It helps in assessing risk-free return opportunities in the market.

4. Using the Calculator

Tips: Enter the price per $100 of face value and the days to maturity. Both values must be positive numbers (price > 0, days ≥ 1).

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-Bill calculations to simplify comparisons between different maturities.

Q2: What's the difference between discount rate and investment rate?
A: The discount rate uses the face value as the denominator, while the investment rate (what this calculator shows) uses the purchase price, making it more accurate for ROI comparisons.

Q3: Are T-Bill yields risk-free?
A: T-Bills are considered virtually risk-free as they're backed by the U.S. government, though they're subject to inflation risk.

Q4: How often are T-Bills issued?
A: The U.S. Treasury issues 4-week, 8-week, 13-week, 26-week, and 52-week T-Bills on a regular schedule.

Q5: Can individuals buy T-Bills directly?
A: Yes, individuals can buy T-Bills directly from TreasuryDirect.gov or through banks and brokers.