Bond Equivalent Yield

Calculate bond equivalent yield for comparison.

Bond Equivalent Yield Calculator - Financial Tools

Bond Equivalent Yield Calculator

Bond Type

Bond Equivalent Yield

Bond Comparison

Bond	Type	BEY	Details	Action

Formula & Information

Discount Bond BEY Formula

BEY = [(Face Value - Purchase Price) / Purchase Price] × (365 / Days to Maturity)

Periodic Payment Bond BEY

BEY = 2 × [(1 + r/n)^n - 1]
where r = annual rate, n = compounding frequency

Key Concepts

Bond Equivalent Yield: Standardized yield measure for comparing bonds
Discount Bond: Sold below face value, no periodic payments
BEY Purpose: Enables comparison of bonds with different payment structures
Semi-annual Basis: BEY assumes semi-annual compounding

Usage Tips

• Use for comparing T-bills with coupon bonds
• Higher BEY indicates better yield for comparison
• Consider tax implications in actual decisions
• BEY ignores reinvestment risk

Understanding Bond Equivalent Yield

What is BEY?

Bond Equivalent Yield standardizes yields across different bond types by converting them to a semi-annual compounding basis, making comparison easier.

When to Use BEY

• Comparing Treasury bills with bonds
• Evaluating different investment options
• Portfolio yield analysis

BEY Limitations

• Assumes reinvestment at same rate
• Ignores credit risk differences
• Tax considerations not included
• Liquidity differences ignored

Alternative Measures

• Yield to Maturity (YTM)
• Effective Annual Yield
• Tax-Equivalent Yield

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