What is Bond Equivalent Yield (BEY)?
Bond Equivalent Yield Calculator: The Bond Equivalent Yield (BEY) is a method used to annualize the yield on short-term bonds or discount securities, which typically have maturities of less than one year. It allows investors to compare the yield of such bonds to other annualized investments.
Bond Equivalent Yield Formula
The formula to calculate Bond Equivalent Yield is as follows:
BEY = [(Face Value - Purchase Price) / Purchase Price] * (365 / Days to Maturity)
Where:
- Face Value: The bond's value at maturity.
- Purchase Price: The price you paid for the bond.
- Days to Maturity: The remaining days until the bond matures.
Bond Equivalent Yield Calculator
Use the calculator below to determine the Bond Equivalent Yield:
Why Use the Bond Equivalent Yield?
Investors use BEY to:
- Compare short-term bond yields with annualized returns of other investments.
- Assess the performance of discount bonds.
- Make informed investment decisions based on standardized annual yields.