How to use the TBILLEQ function

What is the TBILLEQ function?

The TBILLEQ function calculates the equivalent bond yield for a Treasury bill. It converts the T-bill discount rate to an equivalent annual yield for comparison to bonds.

What is a treasury bill?

A treasury bill, or T-bill, is a short-term U.S. government debt obligation backed by the Treasury Department with a maturity of 1 year or less that is sold at a discount from par in regular auctions.

What is the the equivalent bond yield for a Treasury bill?

The equivalent bond yield approximates the annual yield on a T-bill if held to maturity. It accounts for the fact that T-bills are issued at a discount and redeemed at par. The equivalent yield allows comparison between T-bills and coupon bonds.

What is the difference between TBILLYIELD an TBILLEQ fuctions?

TBILLYIELD calculates a T-bill's discount yield based on the purchase price.TBILLYIELD calculates the straight T-bill discount yield.

TBILLEQ converts T-bill discount yields to an annualized bond equivalent yield for comparison.  TBILLEQ provides the equivalent bond yield. TBILLEQ lets you compare T-bill yields vs bond yields.

Excel functions for bonds and treasury bills

Function	Description
TBILLEQ	Returns the bond-equivalent yield for a Treasury bill
TBILLPRICE	Returns the price per $100 face value for a Treasury bill
TBILLYIELD	Returns the yield for a Treasury bill
ACCRINT	Returns the accrued interest for a security that pays periodic interest
ACCRINTM	Returns the accrued interest for a security that pays interest at maturity
DURATION	Returns the annual duration of a security with periodic interest payments
MDURATION	Returns the Macauley modified duration for a security with an assumed par value of $100
DISC	Returns the discount rate for a security
INTRATE	Returns the interest rate for a fully invested security

TBILLEQ function Syntax

TBILLEQ(settlement, maturity, discount)

TBILLEQ function Arguments

settlement	Required. The Treasury bill's settlement date which is the date after the issue date.
maturity	Required. The date when the security expires.
discount	Required. The Treasury bill's discount rate.

What is the Treasury bill's settlement date?

The date after the issue date. A Treasury bill's settlement date is the date 1 business day after the auction when payment must be received and the bill is delivered to the buyer's account in exchange for the purchase price.

What is the Treasury bill's maturity?

The maturity date of a Treasury bill is the date when the bill's term expires, typically in 4, 8, 13, 26, or 52 weeks, and the Treasury repays the par value to the investor.

What is the Treasury bill's discount rate?

The Treasury bill's discount rate refers to the interest rate used to calculate the price of a T-bill when it is issued.

TBILLEQ function example

Formula in cell C6:

TBILLEQ function tips and tricks

Treasury bills are issued at a discount from the face value, the interest paid is the face value - purchase price.

Keep in mind to use the DATE function if you enter dates in the function instead of using cell references.

For example,

Date and time arguments are truncated to integers meaning the time part is removed.

TBILLEQ function not working

The TBILLEQ function returns:

• #VALUE! error if settlement or maturity is not a valid data type.
• #NUM! error if
  • discount <=0 (zero)
  • settlement > maturity, or if maturity is more than a year after the settlement

How is the TBILLEQ function calculated?

Calculation formula:

TBILLEQ = (365 * rate)/(360-(rate*DSM))

DSM = days between settlement to maturity ignoring maturity date that is more than a year after settlement.

Functions in 'Financial' category

The TBILLEQ function function is one of 29 functions in the 'Financial' category.

Excel function categories

Excel categories

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