Bond Equivalent Yield Calculator
Annualise the return on a discount security and compare bond equivalent, bank discount and money-market yields side by side.
Quick answer
Bond equivalent yield annualizes the return on a discount security: (face value - price) / price x 365 / days to maturity. It uses price as the base and a 365-day year, so it exceeds the bank discount yield.
Bond Equivalent Yield Calculator
Bond Equivalent Yield
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Bank Discount Yield
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Money-Market Yield
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Holding-Period Return
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Effective Annual Yield
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Yield Comparison
| Measure | Base | Year basis | Yield |
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Assumptions & method
- Bond equivalent yield = ((F − P) ÷ P) × (365 ÷ d), with F face value, P purchase price and d days to maturity.
- Bank discount yield = ((F − P) ÷ F) × (360 ÷ d). Money-market yield = ((F − P) ÷ P) × (360 ÷ d).
- Holding-period return = (F − P) ÷ P. Effective annual yield = (F ÷ P)^(365 ÷ d) − 1, which assumes the return can be reinvested at the same rate.
- The simple BEY is valid for up to one year. The longer-maturity adjustment used for some securities is not included.
- Fees, taxes and settlement conventions are not included. Estimates only, not advice.
Results are estimates based on the figures you enter. They are not guarantees and not financial advice.
Why discount securities have several yields
A discount security, such as a short-term government bill, pays no coupon. You pay less than face value and receive the face value at maturity, so your gain is the difference. That one gain can be annualised in several ways. The bank discount yield divides by face value and uses a 360-day year, which is how prices are often quoted. The bond equivalent yield divides by the price actually paid and uses 365 days, so it is better for comparing with coupon bonds. The money-market yield also uses the price but keeps a 360-day year.