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Treasury is interested in buying bills but don’t know how you will make money? We will explain.
T -bills do not pay interest like other treasury. Instead, you buy bills at a discounted price and hold them by the end of the period. Once the term ends, or reaches maturity, you get the cost of the face.
Let’s look at the Treasury Bill auction to see how the Treasury Bill purchases.
On May 15, 2024, Treasury auctioned for a 17 -week Treasury Bill, which had the date of the May 21 issue and the dates of September 17. The cost of $ 100 is about $ .298.27, or the annual discount rate (which is “shown as” high rate “in the Treasury Directorate) 5.225 %.
If you have purchased $ 1,000 worth of T -Bill at this auction, it means that you may have paid $ 982.73 on May 15. On September 17, you will get $ 1,000 on your investment .2 17.27.
If you want to re -invest in this T -Bill for a year, you can reach the basis of the original purchase price of $ 982.73 at the annual investment rate for your 17 -week T -Bill.
To discover how it works, use our TB Calculator below.
