Submitted by Comfortable_Fly6423 t3_10ph45y in personalfinance
Hi, sorry rookie here. If I purchase a 6 month T Bill yielding 4.83%. If I hold for 6 months do I only get half the yield? So like 2.415%. I just want to confirm.
Thank you!
Comments
nozzery t1_j6ke6vd wrote
You get 4.83% annual interest rate. If you hold for 180 days, $deposit * 0.0483 / 365 * 180 = $interest. Do not sell TBills before maturity, or you may lose money.
Comfortable_Fly6423 OP t1_j6khbde wrote
Ty
fdjadjgowjoejow t1_j6kwyt8 wrote
> $deposit * 0.0483 / 365 * 180 = $interest.
Rookie # 2 here. I'm sorry but could you kindly explain the math another way? The asterisks and the $ sign in front of interest have me confused. I do understand that for example if the investment was $100 and the yield was annualized at 4.83% and the investment was for 6 months that you would not be getting $4.83 at the end of 6 months but rather $2.415 but I don't understand what is being multiplied and divided in the example above.
My math skills (understanding) are from " The Little House on the Prairie"
nozzery t1_j6l6u96 wrote
Your math is fine
Werewolfdad t1_j6ke8sl wrote
Yes yields are always expressed in annual terms
Comfortable_Fly6423 OP t1_j6khbo3 wrote
Ty
HorizontalBob t1_j6kxjd9 wrote
You pay $975.85 and get $1000 in 6 months.
Of course, you're buying before the auction so the price isn't set.