1 Month Treasury Bill Rate Calculator

1-Month Treasury Bill Rate Calculator

Understanding Treasury Bills and Their Rates

Treasury Bills (T-Bills) are short-term debt instruments issued by the U.S. Department of the Treasury to finance government spending. 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 sold at a discount from their face value and mature at face value, with the difference representing the investor's return.

How the 1-Month Treasury Bill Rate is Calculated

The annualized rate of return on a Treasury Bill is typically calculated based on its purchase price, face value, and the number of days until maturity. The formula used here is derived from the standard method for calculating T-Bill yields:

Annualized Rate = ((Face Value - Purchase Price) / Purchase Price) * (365 / Days to Maturity) * 100

This formula first determines the holding period return (the profit as a percentage of the purchase price), then annualizes it by scaling it to a 365-day year and multiplying by 100 to express it as a percentage.

Example Calculation:

Let's say you purchase a 1-month Treasury Bill with a Face Value of $1,000 for a Purchase Price of $995.50, and it has 30 days until maturity.

  • Face Value: $1,000
  • Purchase Price: $995.50
  • Days to Maturity: 30

Using the formula:

Annualized Rate = ((1000 - 995.50) / 995.50) * (365 / 30) * 100

Annualized Rate = (4.50 / 995.50) * (12.1667) * 100

Annualized Rate = 0.0045198 * 12.1667 * 100

Annualized Rate ≈ 5.50%

This means the T-Bill offers an approximate annualized yield of 5.50% based on these figures.

function calculateTreasuryBillRate() { var faceValue = parseFloat(document.getElementById("faceValue").value); var discountPrice = parseFloat(document.getElementById("discountPrice").value); var daysToMaturity = parseInt(document.getElementById("daysToMaturity").value); var resultDiv = document.getElementById("result"); if (isNaN(faceValue) || isNaN(discountPrice) || isNaN(daysToMaturity) || faceValue <= 0 || discountPrice <= 0 || daysToMaturity = faceValue) { resultDiv.innerHTML = "Please enter valid positive numbers for all fields, ensuring the Purchase Price is less than the Face Value."; return; } var holdingPeriodReturn = (faceValue – discountPrice) / discountPrice; var annualizedRate = holdingPeriodReturn * (365 / daysToMaturity); var annualPercentageRate = annualizedRate * 100; resultDiv.innerHTML = "The calculated annualized Treasury Bill rate is: " + annualPercentageRate.toFixed(2) + "%"; }

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