Money market yield across conventions. Discount yield divides by face value and uses a 360 day year, so the same instrument quotes lower on that basis than on a bond equivalent basis.
Also called: treasury bill yield, commercial paper yield.
4.89% effective annual yield from a quoted 4.8% on the bond equivalent basis. On 100,000 over 91 days that is $1,196.71. The conventions differ by 0.12% points, which is why comparing quoted yields directly is unsafe.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
Treasury bills and commercial paper are quoted on a bank discount basis: the return is divided by face value rather than by the price paid, and the year is taken as 360 days. Both choices make the quoted number lower than the return you actually earn. Bond equivalent yield divides by the price and uses 365 days, which is comparable to a bond. Effective annual yield compounds the period return. Comparing a discount quote against a deposit rate without converting is comparing different measures.
the discount convention divides by face value and uses a 360 day year, so it always reads lowerEach of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.
Effective annual yield4.89%
100,000 x 4.8% x 91/365 = 1,196.71, worked by hand on the actual/365 bond-equivalent convention
Open this exampleEffective annual yield4.8%
boundary: at exactly 365 days there is no period to annualise, so every convention agrees
Open this exampleFormula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator