How to Use Bond Equivalent Yield Calculator
The Bond Equivalent Yield Calculator annualises holding-period returns for discount instruments on a 365-day basis.
- Enter Face Value — The amount the issuer pays at maturity.
- Enter Purchase Price — The amount you pay today.
- Enter Days to Maturity — Calendar days from today until redemption.
- Choose a currency for display.
- Read the Result — The Bond Equivalent Yield Calculator outputs the discount amount, the holding period return, and the annualised BEY.
Formula & Theory — Bond Equivalent Yield Calculator
The Bond Equivalent Yield Calculator uses the standard money-market formula:
Discount = Face Value − Purchase Price
Holding Period Return = Discount / Purchase Price
BEY = HPR × (365 / Days to Maturity)| Symbol | Meaning |
|---|---|
| F | Face value of the instrument |
| P | Purchase price today |
| t | Days from purchase to maturity |
| HPR | Holding period return |
Important distinctions:
- BEY uses 365 days (sometimes 366 for leap years) and divides by purchase price.
- Bank discount yield uses 360 days and divides by face value, so it always reports a lower number than BEY for the same instrument.
- Money market yield (MMY) uses 360 days and purchase price, sitting between the two.
When comparing T-bills with coupon bonds, BEY is the most fair single-number comparison.
Use Cases for Bond Equivalent Yield Calculator
- Treasury bill investing — Retail and institutional investors compare T-bill returns with bonds and money-market funds.
- Cash management — Corporate treasurers benchmark short-term liquidity yields on a consistent basis.
- Fixed-income trading desks — Traders convert quotes between discount yield and BEY to identify relative value.
- Education — Finance students learn why money-market conventions matter when interpreting yield quotes.
- CFA & exam preparation — BEY is a standard formula on professional exams; the calculator helps verify worked examples.
The Bond Equivalent Yield Calculator removes day-count confusion and shows what discount instruments really yield on a comparable basis.