# You would like to purchase a Treasury bill that has a $10,000 face value and is 68 days from... ## Question: You would like to purchase a Treasury bill that has a$10,000 face value and is 68 days from maturity. The current price of the Treasury bill is $9,875. Calculate the discount yield on this Treasury bill. ## Treasury Securities: Treasury securities are debt financial securities that are backed by the government. The maturity period of the treasury securities ranges from less than a year to thirty years. ## Answer and Explanation: 1 Data: Face value =$10,000

Days from maturity = 68 days

Current price (T-bill) = \$9,875

Solving:

{eq}Discount \ yield \ (T-bill) \ = \ \dfrac{Face \ value \ - \ Current \ price \ (T-bill)}{Face \ value} \ \times \ \dfrac{360}{Days \ from \ maturity} \\ Discount \ yield \ (T-bill) \ = \ \dfrac{10,000 \ - \ 9,875}{10,000} \ \times \ \dfrac{360}{68} \\ Discount \ yield \ (T-bill) \ = \ \dfrac{125}{10,000} \ \times \ \dfrac{360}{68} \\ Discount \ yield \ (T-bill) \ = \ 0.0662 \ or \ 6.62\% {/eq} 