Canadian Securities Course (CSC) Practice Exam

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Study for the Canadian Securities Course Exam with our comprehensive practice test. Explore flashcards and multiple-choice questions, each with detailed hints and explanations. Prepare for your CSC exam with confidence!

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How is the T-bill yield calculated?

Term x 100
(100-Price)/Price
365/term x 100
Annual dollar amount of interest/Current market price

The correct answer is: (100-Price)/Price

The other options are incorrect for a number of reasons. Option A does not take into account the price of the T-bill, Option C calculates the yield on a 365-day basis whereas most T-bills have 360-day terms, and Option D does not consider the time value of money as it only looks at the current market price and annual interest amount. Option B is the correct formula as it takes into consideration the price and yield of the T-bill. It is calculated by subtracting the T-bill's price from its face value, then dividing that by the price and multiplying by 100. This gives the percentage return on the T-bill.