Bond Equivalent Yield Calculator
Calculate BEY to analyze annual returns on zero-coupon bonds and discount securities
Calculate Bond Equivalent Yield
Current market price of the bond
Principal amount paid at maturity
Number of days until bond matures (typically ≤ 365 days)
Example Calculation
Treasury Bill Example
Type: 180-day Treasury Bill
Face Value: $1,000
Purchase Price: $980
Days to Maturity: 180 days
Discount: $20
Calculation
BEY = ($1,000 - $980) / $980 × (365 / 180)
BEY = $20 / $980 × 2.028
BEY = 0.0204 × 2.028
BEY = 4.14%
BEY Formula Components
Discount Amount
Face Value - Purchase Price
Dollar profit at maturity
Discount Yield
Discount / Purchase Price
Return over holding period
Annualization
× (365 / Days to Maturity)
Convert to annual yield
BEY Tips
BEY is best for bonds under 1 year maturity
Uses 365-day year convention
Perfect for Treasury bills and commercial paper
Enables comparison with annual yield securities
Understanding Bond Equivalent Yield
What is Bond Equivalent Yield?
Bond Equivalent Yield (BEY) is a standardized measure that converts the yield on a discount bond to an annual basis. It's particularly useful for zero-coupon bonds and Treasury bills that don't pay periodic interest.
Why is it Important?
- •Enables comparison with annual yield securities
- •Standardizes yields across different maturities
- •Helps evaluate short-term investment opportunities
- •Provides annualized return perspective
Formula Explanation
BEY = (Face Value - Price) / Price × (365 / Days to Maturity)
- BEY: Bond Equivalent Yield (%)
- Face Value: Principal paid at maturity ($)
- Price: Current market price ($)
- Days to Maturity: Days until bond matures
- 365: Days in year for annualization
Note: BEY assumes reinvestment at the same rate and uses simple interest calculation