The Makam (T-Bill) is a type of government bond
issued by the Bank of Israel
to the public on behalf of the government. Every month a new T-Bill is issued, with a life span of one year.
The Makam does not carry any interest nor is it linked to any instrument. It is traded at a discount on its nominal price. When the Makam holders sell it, they receive one shekel for each bond, and their profit is the difference between the shekel and the price at which they bought the Makam.
The Makam is used for absorbing monetary surpluses from the public and regulating economic activity, and is equivalent to a bank's short-term deposit. The Makam is also used by the Bank of Israel to meet the inflation target (the rate of increase in prices measured by the consumer price index), alongside the determination of the interest rate in the capital market.
Calculating the Yield
Investors who buy a Makam are paid 100 Agorot, and if they buy at less than 100 Agorot, their profit is the difference between the purchase price and 100 agorot.
For example: A 6-month Makam was purchased for 97 NIS. Investors who hold the Makam until redemption, will receive 100 NIS, i.e., a semi-annual return of 3%, or an annual return of 6%.