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**CFA Practice Question**

If a Treasury Bill has 115 days between settlement and maturity, and is priced at .9825, what is the yield on a discount basis?

A. 1.75%

B. 5.48%

C. 3.13%

**Explanation:**Treasury bills are zero-coupon instruments with a maturity of one year or less. The convention in the T-Bill market is to calculate the yield on a discount basis. The formula is: (1-.9825)(360/115) = .0548 = 5.48%.

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**User Contributed Comments**
2

User |
Comment |
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Sheeb |
It's not a perfect method. But for those who are struggling to remember the discount yield you can approximate with a TVM on your BAII plus. N=115/360 PV=-0.9825 N=0 FV=1 Cpt I/Y=5.68% Not perfect but gives you a rough estimate. |

zriddle |
365/115 * (1 - Price) |