1. What Is T-Bill Interest Calculation?

T-Bill interest calculation determines the return on investment for Treasury bills, which are short-term government securities sold at a discount to their face value.

2. How Does The Calculator Work?

The calculator uses the simple interest formula:

Where:

• Face Value — The amount received at maturity
• Purchase Price — The amount paid to acquire the T-bill

Explanation: The difference between the face value and purchase price represents the interest earned on the investment.

3. Importance Of Interest Calculation

Details: Accurate interest calculation is crucial for investment planning, comparing returns across different securities, and making informed financial decisions.

4. Using The Calculator

Tips: Enter the face value and purchase price in dollars. Both values must be positive numbers, and the face value must be greater than the purchase price.

5. Frequently Asked Questions (FAQ)

Q1: What are Treasury bills?
A: 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 interest different from other investments?
A: T-bill interest is the difference between purchase price and face value, rather than a periodic interest payment.

Q3: Are T-bills risk-free?
A: T-bills are considered among the safest investments as they are backed by the full faith and credit of the U.S. government.

Q4: How are T-bill returns taxed?
A: T-bill interest is subject to federal income tax but exempt from state and local taxes.

Q5: Can I sell T-bills before maturity?
A: Yes, T-bills can be sold on the secondary market before maturity, though the price received may differ from the purchase price.