6 Month Treasury Bill Rate Calculator

by

6-Month Treasury Bill Rate Calculator

Results

.calculator-container { font-family: Arial, sans-serif; border: 1px solid #ccc; padding: 20px; border-radius: 8px; max-width: 600px; margin: 20px auto; background-color: #f9f9f9; } .calculator-inputs h2, .calculator-results h3 { text-align: center; margin-bottom: 20px; color: #333; } .input-group { margin-bottom: 15px; display: flex; align-items: center; justify-content: space-between; } .input-group label { margin-right: 10px; font-weight: bold; color: #555; flex-basis: 60%; } .input-group input { padding: 8px; border: 1px solid #ccc; border-radius: 4px; width: 40%; box-sizing: border-box; } button { display: block; width: 100%; padding: 10px 15px; background-color: #007bff; color: white; border: none; border-radius: 5px; font-size: 16px; cursor: pointer; margin-top: 20px; transition: background-color 0.3s ease; } button:hover { background-color: #0056b3; } #result { margin-top: 20px; padding: 15px; background-color: #e9ecef; border: 1px solid #ced4da; border-radius: 5px; text-align: center; font-size: 1.1em; color: #495057; } #result strong { color: #0056b3; } function calculateTreasuryBillRate() { var faceValue = parseFloat(document.getElementById("faceValue").value); var discountPrice = parseFloat(document.getElementById("discountPrice").value); var daysToMaturity = parseFloat(document.getElementById("daysToMaturity").value); var resultDiv = document.getElementById("result"); if (isNaN(faceValue) || isNaN(discountPrice) || isNaN(daysToMaturity) || faceValue <= 0 || discountPrice <= 0 || daysToMaturity = faceValue) { resultDiv.innerHTML = "Error: Please enter valid positive numbers for all fields, and ensure the discount price is less than the face value."; return; } // Calculate the discount amount var discountAmount = faceValue – discountPrice; // Calculate the annual discount rate // Formula: (Discount Amount / Face Value) * (360 / Days to Maturity) * 100 var annualDiscountRate = (discountAmount / faceValue) * (360 / daysToMaturity) * 100; // Calculate the equivalent coupon-equivalent yield (CEY) // Formula: (Discount Rate * 360) / (360 – Discount Rate * Days to Maturity / 100) var discountRateDecimal = annualDiscountRate / 100; var cey = (discountRateDecimal * 360) / (360 – (discountRateDecimal * daysToMaturity)); resultDiv.innerHTML = "Annual Discount Rate: " + annualDiscountRate.toFixed(4) + "%" + "Coupon-Equivalent Yield (CEY): " + (cey * 100).toFixed(4) + "%"; }

Understanding the 6-Month Treasury Bill Rate Calculator

Treasury Bills, often referred to as T-Bills, are short-term debt instruments issued by the U.S. Department of the Treasury. They are sold at a discount to their face value and pay the face value on maturity. This means the investor's return is the difference between the face value and the purchase price (the discount). T-Bills are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government.

A 6-month Treasury Bill is a T-Bill with a maturity period of approximately six months. The rate of return on a T-Bill is typically quoted in two ways: the discount rate and the coupon-equivalent yield (CEY). Our calculator helps you determine both based on the price you paid, the face value, and the time remaining until maturity.

Key Components of the Calculator:

  • Face Value of T-Bill ($): This is the amount the Treasury will pay you when the T-Bill matures. For standard T-Bills, this is often in multiples of $100, with $1,000 being a common denomination.
  • Discount Price ($): This is the price you actually pay for the T-Bill. It will be less than the face value.
  • Days to Maturity: This is the number of days remaining until the T-Bill reaches its maturity date and you receive the face value. For a 6-month T-Bill, this is typically around 182 days, but can vary slightly.

How the Calculations Work:

The calculator uses two primary formulas:

  1. Annual Discount Rate: This is the rate quoted directly by the Treasury. The formula is:
    (Discount Amount / Face Value) * (360 / Days to Maturity) * 100
    Here, the 360-day year is used for T-Bill calculations. The 'Discount Amount' is simply the Face Value minus the Discount Price.
  2. Coupon-Equivalent Yield (CEY): This rate is more comparable to yields on other types of interest-bearing securities like coupon bonds or savings accounts. It annualizes the return based on the actual purchase price rather than the face value. The formula is:
    (Discount Rate * 360) / (360 – (Discount Rate * Days to Maturity))
    Note that the 'Discount Rate' here refers to the decimal form of the annual discount rate calculated in the previous step.

Example Calculation:

Let's say you purchase a 6-month Treasury Bill with a Face Value of $1,000 for a Discount Price of $985. The T-Bill has 182 days to maturity.

  • Discount Amount: $1,000 – $985 = $15
  • Annual Discount Rate: ($15 / $1000) * (360 / 182) * 100 ≈ 2.9670%
  • Coupon-Equivalent Yield (CEY): (0.029670 * 360) / (360 – (0.029670 * 182)) ≈ 0.030308 or 3.0308%

Using our calculator with these inputs will yield these results, allowing you to quickly assess the effective return on your T-Bill investment. Understanding these metrics is crucial for comparing short-term investment opportunities.

Leave a Comment