Canadian Securities Course (CSC) Level 1 Practice Exam

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What is the formula to calculate the yield on a Treasury bill?

Yield = (100/price) x (365/term)
Yield = (price / 100) x (term / 365)
Yield = (price - 100) x (365/term)
Yield = (100-price/price) x (365/term) x 100

The correct answer is: Yield = (100-price/price) x (365/term) x 100

The correct formula to calculate the yield on a Treasury bill is: Yield = (100 - price / price) x (365 / term) x 100. This formula accounts for the discount in the price of the Treasury bill compared to its face value (100) and calculates the yield based on the number of days to maturity (term). Option D correctly reflects this calculation method. Options A, B, and C are incorrect because they do not accurately capture the relationship between the price, face value, and term of the Treasury bill in the yield calculation formula.