The holding period yield is the return that the investor will earn if the bill is held until it matures. The holding period yield formula is (price received at maturity ? initial price + interest payments) / (initial price) = (10,000 ? 9,900 + 0) / (9,900) = 1.01%. Recall that when buying a T-bill, investors pay the face value less the discount and receive the face value at maturity.

The formula for bank discount yield is: (D / F) × (360 / t). Actual disc

($2,035 / $100,000) × (360 / 172) = 0.04259 = 4.26% = bank discount yield.

The effective annual yield (EAY) is based on a 365-day year and accounts for compound interest. EAY = (1 + holding period yield)^365/t ? 1. The holding period yield formula is (price received at maturity ? initial price + interest payments) / (initial price) = (10,000 ? 9,900 + 0) / (9,900) = 1.01%. EAY = (1.0101)^365/40 ? 1 = 9.60%.

($21,000 / 1,000,000) × (360 / 135) = 5.6%.