U.S. Treasury Bill values can fluctuate. The feature that attracts individuals to invest is the fact that you can purchase at a discounted rate and then the bill gains value over time so that you can achieve a return.
The Wall Street Journal is where you are going to find the current value of U.S. Treasury Bills and treasury debt bonds. You will find that the bills are traded in the primary and secondary markets and are auctioned by the U.S. government directly. Basically, the Treasury bill market is the main market of the U.S. government because the bill yields are used in the construction of different adjustable rate mortgage indexes.
When a Treasury bill quote is given, it is given at a discount. The Treasury Bills are used in the calculation of the interest rates on adjustable rate mortgage loans. This means that the bills come in different forms and are auctioned at different times in different ways. They have both weekly and monthly values that are traded in the primary and secondary markets.
Treasury bill quotes are given by using conversion formulas for bills that are no more than 6 months until they mature. These are formulas that are mainly used by the professionals. If you want to invest in Treasury Bills, you can consult with a financial advisor and that advisor will be given the quote for you or can do any applicable math to tell you what your price is going to be so that you can make a purchase. Remember that you buy the bills for a discounted rate and they then ride the market. This means that the rates may fluctuate while you are working toward a return on your investment.
One of the formulas that is used in the calculation of US Treasury bill values goes a little something like this: The discount yield is determined by the face value minus the purchase price, divided by the face value, multiplied by 360 days divided by the days until maturity multiplied by 100%. Although this is based on a 360 day year, it is possible for the value to be based on a 365 day year, which is called the "bond equivalent yield."
Nevertheless, the above formula is not the only formula used in calculating the bill values due to the fact that a number of factors can come into play. Above is just an example of half a dozen formulas that are used in the market.
The formulas that are used take into account that the return on the bill is going to be a percentage of its face value instead of the price it was purchased at. Because the face value is more than the actual purchase price, the yield tends to be understated.
When the yields are determined, the high and low values of the auctioned Treasury Bills are made public in a Treasury report not long after the auction has taken place.
You should not have to worry about the exact methods used to calculate percentages. Your financial advisor will help you understand what you need to understand and will help you to secure the Treasury Bills that you need to make the most of your financial situation. Your financial advisor is not going to put you in a bad situation where you are gong to intentionally lose money. It is true that any investment does possess some degree of risk. There are also those investments that are more complicated than others. The good news, however, is that your financial advisor is going to be able to help you understand these risks.
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