US bills are quoted as a bank discount rate. The rate is applied to face value and scaled by the days to maturity over a 360-day year. The result is the amount taken off the price.
Price per 100
Price = 100 − (Discount rate × Days ÷ 360)
The rate is in percent. A rate of 4.00 means 4.00%.
A worked example
At a 4.00% discount rate and 91 days to maturity, the discount is 4.00 × 91 ÷ 360 = 1.011111, so the price is 98.988889 per 100. Buying 10,000 of face value costs about 9,898.89, and the income if held to maturity is about 101.11.
Try it: price from a discount rate
- Price per 100
- 98.988889
- Discount per 100
- 1.011111
- Cost
- 9,898.89
- Income at maturity
- 101.11
- Investment rate365-day year
- 4.097%
Illustrative numbers you can change. Not a quote or a market rate.
Key points
- Price per 100 equals 100 minus rate times days over 360.
- The same rate gives a lower price on a longer bill.
- Rate up means price down.
General information only. It is not investment, legal or tax advice. Details vary by market and can change, so check the issuer’s current rules.