T Bills Calculator

T-Bills Yield Calculator

function calculateTBills() { var faceValue = parseFloat(document.getElementById('faceValue').value); var purchasePrice = parseFloat(document.getElementById('purchasePrice').value); var daysToMaturity = parseInt(document.getElementById('daysToMaturity').value); var resultDiv = document.getElementById('tBillsResult'); if (isNaN(faceValue) || isNaN(purchasePrice) || isNaN(daysToMaturity) || faceValue <= 0 || purchasePrice <= 0 || daysToMaturity = faceValue) { resultDiv.innerHTML = 'Purchase Price must be less than Face Value for a T-Bill.'; return; } var discountAmount = faceValue – purchasePrice; // Bank Discount Yield (BDY) – uses 360-day year var bankDiscountYield = (discountAmount / faceValue) * (360 / daysToMaturity); // Bond Equivalent Yield (BEY) – uses 365-day year var bondEquivalentYield = (discountAmount / purchasePrice) * (365 / daysToMaturity); resultDiv.innerHTML = 'Discount Amount: $' + discountAmount.toFixed(2) + " + 'Bank Discount Yield (BDY): ' + (bankDiscountYield * 100).toFixed(2) + '%' + 'Bond Equivalent Yield (BEY): ' + (bondEquivalentYield * 100).toFixed(2) + '%'; } .calculator-container { font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif; background-color: #f9f9f9; border: 1px solid #ddd; border-radius: 8px; padding: 25px; max-width: 450px; margin: 30px auto; box-shadow: 0 4px 12px rgba(0, 0, 0, 0.08); color: #333; } .calculator-container h2 { text-align: center; color: #2c3e50; margin-bottom: 25px; font-size: 1.8em; } .calculator-content { display: flex; flex-direction: column; gap: 15px; } .input-group { display: flex; flex-direction: column; margin-bottom: 10px; } .input-group label { margin-bottom: 7px; font-weight: bold; color: #555; font-size: 0.95em; } .input-group input[type="number"] { padding: 12px; border: 1px solid #ccc; border-radius: 5px; font-size: 1em; transition: border-color 0.3s ease; } .input-group input[type="number"]:focus { border-color: #007bff; outline: none; box-shadow: 0 0 0 3px rgba(0, 123, 255, 0.25); } .calculate-button { background-color: #007bff; color: white; padding: 13px 20px; border: none; border-radius: 5px; font-size: 1.1em; cursor: pointer; transition: background-color 0.3s ease, transform 0.2s ease; margin-top: 15px; } .calculate-button:hover { background-color: #0056b3; transform: translateY(-2px); } .calculate-button:active { transform: translateY(0); } .result-area { background-color: #e9f7ef; border: 1px solid #d4edda; border-radius: 5px; padding: 18px; margin-top: 25px; font-size: 1.05em; color: #155724; line-height: 1.6; } .result-area p { margin: 0 0 8px 0; } .result-area p:last-child { margin-bottom: 0; } .result-area strong { color: #0a3622; } .error { color: #dc3545; background-color: #f8d7da; border-color: #f5c6cb; padding: 10px; border-radius: 5px; text-align: center; }

Understanding Treasury Bills (T-Bills) and Their Yields

Treasury Bills, commonly known as T-Bills, are short-term debt obligations issued by the U.S. Department of the Treasury. They are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government. T-Bills are typically issued with maturities of 4, 8, 13, 17, 26, and 52 weeks.

How T-Bills Work

Unlike bonds or other debt instruments that pay periodic interest, T-Bills are sold at a discount from their face (par) value. The investor's return comes from the difference between the purchase price and the face value received at maturity. For example, if you buy a $10,000 T-Bill for $9,900, your profit is $100 when it matures.

Key Yield Metrics for T-Bills

Because T-Bills don't pay traditional interest, their returns are expressed in terms of yield. There are two primary ways to calculate and quote T-Bill yields:

1. Bank Discount Yield (BDY): This is the yield most commonly quoted by the Treasury and in financial markets. It's calculated based on the face value of the T-Bill, the discount amount, and a 360-day year.

   The formula for Bank Discount Yield is:

   BDY = (Discount Amount / Face Value) * (360 / Days to Maturity)

   Where Discount Amount = Face Value - Purchase Price.

   The BDY can sometimes be misleading because it uses the face value in the denominator and a 360-day year, which can make it seem lower than comparable investments.

2. Bond Equivalent Yield (BEY): This yield provides a more accurate comparison to other interest-bearing investments like bonds, as it's based on the actual purchase price and uses a 365-day year. It annualizes the return on the investment amount, not the face value.

   The formula for Bond Equivalent Yield is:

   BEY = (Discount Amount / Purchase Price) * (365 / Days to Maturity)

   The BEY is generally higher than the BDY and is often preferred by investors for comparing T-Bills to other investment opportunities.

Using the T-Bills Yield Calculator

Our T-Bills Yield Calculator helps you quickly determine both the Bank Discount Yield and the Bond Equivalent Yield for your T-Bill investment. Simply input the following:

• Face Value: The amount you will receive when the T-Bill matures (e.g., $10,000).
• Purchase Price: The price you paid for the T-Bill (this should be less than the face value).
• Days to Maturity: The number of days remaining until the T-Bill matures.

The calculator will then provide you with the Discount Amount, the Bank Discount Yield (BDY), and the Bond Equivalent Yield (BEY), allowing you to better understand your investment's true return.

Example Calculation:

Let's say you purchase a T-Bill with a Face Value of $10,000 for a Purchase Price of $9,900, and it has 91 Days to Maturity.

• Discount Amount: $10,000 – $9,900 = $100
• Bank Discount Yield (BDY): ($100 / $10,000) * (360 / 91) = 0.01 * 3.9560 = 0.03956 or 3.96%
• Bond Equivalent Yield (BEY): ($100 / $9,900) * (365 / 91) = 0.010101 * 4.010989 = 0.04051 or 4.05%

As you can see, the BEY provides a slightly higher and often more comparable yield figure.