T-Bill Yield Calculator
Yield Breakdown:
- You buy the T-Bill at a discounted price of ₹98.25.
- At maturity, the government redeems the T-Bill at par value of ₹100.
- Your total absolute discount profit per unit: ₹1.75.
- Annualized compound yield: 7.14% p.a.
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T-Bill Annualized Discount Yield Formula
Calculates the annualized return of zero-coupon Treasury Bills based on their purchase discount and maturity tenure.
Worked Example: 91-day T-Bill bought at ₹98.25
Treasury Bills (T-Bills): Safe short-term parking for cash surplus
A corporate treasurer had ₹10 Lakhs in cash surplus that was not needed for 91 days. Instead of parking it in a 3.5% savings account, he decided to buy 91-day Government Treasury Bills.
T-Bills do not pay coupon interest; they are issued at a discount. He bought the T-Bills at ₹98.25 and redeemed them at ₹100 face value. This transaction yielded a true annualized return of 7.15% p.a.
T-Bills are short-term government debt instruments issued at a discount, offering sovereign security and high yields for 91, 182, or 364 days.
T-Bills are ideal for parking short-term corporate or individual cash surpluses safely, outperforming standard savings deposits.
Frequently Asked Questions
How do Treasury Bills (T-Bills) work?
T-Bills are zero-coupon debt instruments issued by the government at a discount and redeemed at face value on maturity.
What tenures are available for T-Bills?
T-Bills are issued for three specific tenures: 91 days, 182 days, and 364 days.
Are T-Bills safe?
Yes, they carry sovereign guarantee as they are issued directly by the Reserve Bank of India on behalf of the Central Government.
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