Treasury quotes T-bill returns on a discount-yield basis that differs from the more intuitive investment yield for the identical bill — confusing the two is a common source of comparison errors.
How it works
Discount yield divides the dollar discount by face value and annualizes over a 360-day year — the Treasury convention. Investment yield instead divides by the actual purchase price and annualizes over a 365-day year — closer to how other fixed-income yields are typically quoted.
What this does not include
This computes yields for a bill purchased at original issue and held to maturity — a bill bought or sold in the secondary market before maturity has a different, holding-period-specific return this calculator doesn’t compute.
How to use this calculator
- Enter face value, purchase price, and days to maturity.
Frequently asked questions
Why are discount yield and investment yield different for the same bill?
Discount yield divides by the larger face value and uses a 360-day year; investment yield divides by the smaller purchase price and uses a 365-day year — both differences push investment yield higher.
Which yield should I use to compare against other investments?
Investment yield (bond-equivalent yield) is generally the more comparable figure against other interest-bearing investments quoted on a standard annual basis.
Do T-bills pay any interest directly?
No — they’re sold at a discount to face value and pay no coupon; the entire return comes from the difference between purchase price and the face value received at maturity.
