1. What is the US Treasury Bill Return Calculator?

The US Treasury Bill Return Calculator calculates the annualized return on investment for Treasury bills based on face value, purchase price, and days to maturity. It provides investors with a clear understanding of their expected yield.

2. How Does the Calculator Work?

The calculator uses the Treasury bill return formula:

Where:

• \( Face \) — Face value of the Treasury bill ($)
• \( Purchase \) — Purchase price of the Treasury bill ($)
• \( Days \) — Days to maturity (days)

Explanation: The formula calculates the discount yield as an annualized percentage return, accounting for the time value of money.

3. Importance of Treasury Bill Return Calculation

Details: Accurate return calculation is crucial for investment decision-making, portfolio management, and comparing different investment opportunities in the fixed income market.

4. Using the Calculator

Tips: Enter face value and purchase price in dollars, and days to maturity. All values must be valid (positive numbers with days greater than 0).

5. Frequently Asked Questions (FAQ)

Q1: What are Treasury bills?
A: Treasury bills are short-term debt securities issued by the US government with maturities ranging from a few days to 52 weeks.

Q2: How is Treasury bill return different from bond yield?
A: Treasury bills are discount instruments that don't pay periodic interest, so return is calculated based on the difference between purchase price and face value.

Q3: What is a typical Treasury bill return?
A: Returns vary based on market conditions, but Treasury bills generally offer lower returns than longer-term securities due to their lower risk profile.

Q4: Are Treasury bill returns taxable?
A: Yes, the interest income from Treasury bills is subject to federal income tax, but exempt from state and local taxes.

Q5: Can this calculator be used for other discount securities?
A: While the formula is similar, other discount instruments may have different day count conventions or tax treatments.