yield computation based on face amount of a security rather than the purchase price. Treasury bill yields are calculated this way, and also yields on most commercial paper and some municipal notes. Discount yield is calculated by:
discount / face amount × 360 / days to maturity.
yield on a security sold at a discount; for example, U.S. Treasury bills sold at $9,750 and maturing at $10,000 in 90 days. To figure the annual discount yield, divide the discount ($250) by the face amount ($10,000) and multiply the number by the approximate number of days in the year (360) divided by the number of days to maturity (90):
yield on a security sold at a discount-U.S. treasury bills sold at $9,750 and maturing at $10,000 in 90 days, for instance. Also called bank discount basis. To figure the annual yield, divide the discount ($250) by the face amount ($10,000) and multiply that number by the approximate number of days in the year (360) divided by the number of days to maturity (90). The calculation looks like this:
| $250 $10,000 | × | 360 90 | = | .025 | × | 4 | = | .10 | = | 10%. |
