1. What is the US Treasury Yield Calculation?

The US Treasury yield calculation determines the annualized return on investment for Treasury bills based on the difference between face value and purchase price, adjusted for the time to maturity.

2. How Does the Calculator Work?

The calculator uses the Treasury yield equation:

Where:

• \( Face\ Value \) — The amount paid at maturity (USD)
• \( Purchase\ Price \) — The price paid for the Treasury bill (USD)
• \( Days\ to\ Maturity \) — The number of days until maturity

Explanation: The equation calculates the percentage return on investment, annualized to a 365-day year.

3. Importance of Yield Calculation

Details: Accurate yield calculation is crucial for comparing different Treasury investments, assessing returns, and making informed investment decisions.

4. Using the Calculator

Tips: Enter the face value and purchase price in USD, and days to maturity. All values must be positive numbers (face value > purchase price for positive yield).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between yield and coupon rate?
A: Yield reflects the actual return including any discount, while coupon rate is the fixed interest rate on Treasury notes/bonds.

Q2: Why use 365 days instead of 360?
A: This calculator uses the actual/365 convention common for Treasury bills, though some markets use 360-day years.

Q3: How does yield relate to price?
A: Yield and price have an inverse relationship - when price goes down, yield goes up, and vice versa.

Q4: What are typical Treasury bill maturities?
A: Common maturities are 4, 8, 13, 26, and 52 weeks, though other terms exist.

Q5: Is this yield taxable?
A: Treasury yields are subject to federal income tax but exempt from state and local taxes.