1. What is the T-Bill Yield Calculator?

The T-Bill Yield Calculator computes the annualized yield of Canadian Treasury Bills based on their face value, purchase price, and days to maturity. This helps investors compare returns on short-term government securities.

2. How Does the Calculator Work?

The calculator uses the T-Bill yield formula:

Where:

• \( Face\ Value \) — The bill's value at maturity (typically CAD 100)
• \( Purchase\ Price \) — The price paid for the T-Bill
• \( Days \) — Days until maturity
• \( 365 \) — Days in year (Canadian convention)

Explanation: The formula calculates the percentage return annualized to a 365-day period, accounting for the discount at which T-Bills are purchased.

3. Importance of T-Bill Yield Calculation

Details: Calculating T-Bill yields helps investors assess short-term investment returns, compare with other securities, and make informed decisions about parking cash in government-guaranteed instruments.

4. Using the Calculator

Tips: Enter the face value (typically CAD 100), the price you paid for the T-Bill, and the exact days to maturity. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between yield and discount rate?
A: Yield reflects the actual return on investment, while discount rate is based on the percentage discount from face value. Yield is generally higher.

Q2: Are Canadian T-Bill yields taxable?
A: Yes, the interest income (difference between face value and purchase price) is taxable in Canada.

Q3: What's the typical maturity period for Canadian T-Bills?
A: Canadian T-Bills typically mature in 1, 3, 6, or 12 months (approximately 30, 90, 180, or 365 days).

Q4: Why use 365 days instead of 360?
A: Canadian conventions use 365 days for yield calculations, unlike some other markets that use 360 days.

Q5: How often are T-Bill rates updated?
A: The Bank of Canada conducts regular auctions (typically weekly) where new T-Bill rates are set based on market demand.