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T-Bill

Hi, I new to T-Bill, just recently started to buy BS22122Z.

I submitted for non-competitive $15,000.

My bank credit back me $7,000 said my application only partially successful, plus another $159.60 ( final auction price lower than initial bid).

I can understand the 1st portion, meaning I get $8,000 successful.

The $159.60 portion I am not too sure how it work out. (Understand that the yield for this round is 4%.

My limited knowledge about T-bill suggest that, I actually buy at discount ($8,000-$159.60 = $7,840.4), during maturity, I will get full $8,000, meaning I earn $159.60. If my this assumption is correct, I still cannot relate the 4% to $159.60?

Thanks in advance.

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The 4% yield is the annualized yield based on the difference between the discounted price you paid fnf and the face value you will receive at maturity. In this case, $159.60 is the interest earned over the maturity period, and the 4% yield is calculated based on this amount relative to the amount you paid upfront.

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