1. What is T-Bills Return Calculation?

The T-Bills return calculation determines the annualized percentage return on Canadian Treasury Bills based on the difference between face value and purchase price, adjusted for the holding period.

2. How Does the Calculator Work?

The calculator uses the T-Bills return formula:

Where:

• \( Face \) — Face value of the T-Bill ($)
• \( Purchase \) — Purchase price of the T-Bill ($)
• \( Days \) — Days to maturity (days)

Explanation: The formula calculates the discount yield annualized to a 365-day year, providing the percentage return on investment.

3. Importance of T-Bills Return Calculation

Details: Accurate return calculation is crucial for comparing different T-Bill investments, assessing profitability, and making informed investment decisions in government securities.

4. Using the Calculator

Tips: Enter face value and purchase price in dollars, days to maturity in days. All values must be valid (positive numbers, days between 1-365).

5. Frequently Asked Questions (FAQ)

Q1: What are Canadian T-Bills?
A: Canadian Treasury Bills are short-term government securities with maturities of one year or less, sold at a discount to face value.

Q2: How is T-Bill return different from bond yield?
A: T-Bill return is calculated as a discount yield based on the purchase price, while bond yield typically includes coupon payments.

Q3: Why use 365 days in the calculation?
A: The formula uses 365 days to annualize the return based on a standard calendar year for consistency in comparison.

Q4: Are T-Bill returns guaranteed?
A: Yes, T-Bill returns are considered risk-free as they are backed by the Canadian government, making them among the safest investments.

Q5: How often are T-Bills issued?
A: The Government of Canada issues T-Bills regularly through auctions, typically with 1-month, 3-month, 6-month, and 1-year maturities.