1. What is the US T-Bill Interest Calculation?

The US Treasury Bill (T-Bill) interest calculation determines the interest earned on these short-term government securities. T-Bills are sold at a discount and mature at face value, with the difference representing the interest earned.

2. How Does the Calculator Work?

The calculator uses the T-Bill interest formula:

Where:

• \( Face\ Value \) — The maturity value of the T-Bill (in dollars)
• \( Yield \) — The discount yield (in decimal form)
• \( Days \) — The number of days until maturity

Explanation: The equation calculates interest using the 360-day year convention standard for US Treasury bills.

3. Importance of T-Bill Interest Calculation

Details: Accurate interest calculation helps investors compare returns across different T-Bills and make informed investment decisions.

4. Using the Calculator

Tips: Enter face value in dollars, yield in decimal form (e.g., 0.05 for 5%), and days to maturity. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is a 360-day year used instead of 365?
A: The 360-day year is a banking convention that simplifies interest calculations for short-term instruments like T-Bills.

Q2: How does this differ from bond interest calculations?
A: T-Bills are discount instruments (no periodic coupons), while most bonds pay periodic interest payments.

Q3: What's the typical range for T-Bill yields?
A: Yields vary with market conditions but typically range from 0.5% to 5% for standard maturities.

Q4: Are T-Bill interest payments taxable?
A: Yes, interest from T-Bills is subject to federal income tax but exempt from state and local taxes.

Q5: Can this formula be used for other money market instruments?
A: Similar formulas apply to other discount instruments, but some may use 365-day year conventions.