1. What is the 1 Month T Bill Calculator?

The 1 Month T Bill Calculator computes the annualized yield of a Treasury bill based on its face value, purchase price, and days to maturity. Treasury bills are short-term government securities that don't pay periodic interest but are sold at a discount.

2. How Does the Calculator Work?

The calculator uses the T-bill yield formula:

Where:

• \( Face\ Value \) — Maturity value of the T-bill (typically $1,000)
• \( Purchase\ Price \) — Discounted price paid for the T-bill
• \( Days \) — Days to maturity (typically around 30 for 1-month T-bills)
• 360 — Day count convention used for T-bills

Explanation: The formula calculates the discount yield which annualizes the return based on a 360-day year (banking convention).

3. Importance of T Bill Yield Calculation

Details: Calculating T-bill yields helps investors compare returns across different maturities and with other short-term investments. It's essential for cash management and understanding risk-free returns.

4. Using the Calculator

Tips: Enter the face value (typically $1,000), the discounted purchase price, and days to maturity (28-31 for 1-month bills). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why use 360 days instead of 365?
A: The 360-day year is a banking convention for calculating short-term interest rates and makes yield comparisons consistent.

Q2: What's the difference between discount yield and bond equivalent yield?
A: Discount yield uses 360 days and the purchase price as base, while bond equivalent yield uses 365 days and the face value as base.

Q3: Are T-bill yields taxable?
A: T-bill yields are subject to federal income tax but exempt from state and local taxes.

Q4: What's the minimum investment for T-bills?
A: The minimum is $100 for purchases through TreasuryDirect, though they typically trade in $1,000 increments.

Q5: How often are 1-month T-bills issued?
A: 1-month (4-week) T-bills are auctioned weekly, typically every Tuesday.