Calculating the discount rate of a treasury bill is the process of determining the rate at which a bill is sold below its face value. For example, if a $1,000 treasury bill is sold for $980, the discount rate is 2%.
The discount rate is important because it determines the yield an investor will receive on a treasury bill. Treasury bills are considered very safe investments, so their yields are typically lower than those of other types of investments. However, the discount rate can still be a significant factor in determining the overall return on an investment.