Description
TBillEq returns the equivalent bond yield equivalent for a T-Bill's discount rate.
Arguments
settlementDate is a
Date or
DateTime specifying when the Treasury bill was purchased.
maturityDate is a
Date or
DateTime after the settlement date specifying when the Treasury bill matures.
discountRate is a positive number specifying the discount rate for the Treasury bill.
Action
TBillEq returns the equivalent bond yield equivalent for a T-Bill's discount rate. Treasury bills are a promise to pay a fixed amount on a certain day. They are purchased at a discount from this amount and the return on the investment is the difference between the purchase price and the face value. The discount rate is calculated based on the face value and a 360-day year. In contrast, bond yields are calculated based on the purchase price and a full-length year basis.
Examples
If a T-Bill was purchased on February 15, 2000 with a maturity of July 1, 2000, at a discount rate of 8.5%, the equivalent yield can be found by the formula:
TBillEq(DateValue(2000,2,15),DateValue(2000,7,1),0.085)
Returns 0.0891 (rounded to four decimal places) corresponding to an interest rate of 8.91%.
Comments
This function is similar to the Excel function of the same name.