Bond Equivalent Yield Calculator

Convert a discounted short-term instrument's face value, purchase price, and days to maturity into an annualized bond-equivalent yield on a 365-day basis.

Quick Facts

Formula
BEY = (Face − Price) / Price × 365 / Days
Annualizes a discount instrument's period return on an actual/365 basis.
Basis
365-day year, simple interest
Lets a T-bill be compared directly with coupon-bond yields.

Your Results

Calculated
Bond equivalent yield
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Annualized on a 365-day basis
Holding-period return
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Gain over the purchase price
Dollar gain at maturity
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Face value minus purchase price
Effective annual yield
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Compounded (1+HPR)^(365/days)−1

Ready

Enter the face value, purchase price, and days to maturity, then calculate.

How to use the Bond Equivalent Yield Calculator

Short-term instruments such as Treasury bills, commercial paper, and certificates of deposit are often sold at a discount and quoted on a 360-day basis, which makes them awkward to compare with coupon bonds. The bond equivalent yield (BEY), also called the coupon-equivalent or investment yield, restates that return as an annual percentage on a 365-day year, so a 182-day bill can be lined up directly against a one-year note.

The formula

BEY = [(Face value − Purchase price) / Purchase price] × (365 / Days to maturity)

  • Holding-period return: (Face − Purchase) / Purchase is the plain percentage gain you earn between buying the instrument and its maturity.
  • Annualization factor: multiplying by 365 / Days scales that period gain up to a full 365-day year using simple (non-compounded) interest.
  • Effective annual yield: (1 + holding-period return)^(365 / Days) − 1 compounds the same gain over the year and runs slightly higher than the BEY.

A worked example

Buy a $10,000 face-value bill for $9,750 with 182 days to maturity. The dollar gain is $250, the holding-period return is 250 / 9,750 = 2.564%, and the BEY is 2.564% × 365 / 182 = 5.14%. The effective annual yield, which compounds the gain, is about 5.22%.

Reading the output

Compare the BEY against the yield on comparable coupon bonds or other bills of similar credit quality and maturity — a higher BEY means a better annualized return for the risk taken. This tool assumes an actual/365 simple annualization and does not add fees, commissions, or taxes, so subtract those from your dollar gain first if you want a net yield.

Frequently Asked Questions

What is bond equivalent yield?
Bond equivalent yield (BEY) restates the return on a short-term instrument bought at a discount, such as a Treasury bill, as an annual percentage you can compare with coupon-bearing bonds. It equals (Face value − Purchase price) / Purchase price, multiplied by 365 / Days to maturity.
How is bond equivalent yield calculated?
Divide the dollar gain (face value minus purchase price) by the purchase price to get the holding-period return, then multiply by 365 divided by the days to maturity. For a $10,000 bill bought at $9,750 with 182 days left: 250 / 9,750 × 365 / 182 ≈ 5.14%.
How does BEY differ from the effective annual yield?
BEY annualizes with simple interest by multiplying the holding-period return by 365 / days. The effective annual yield instead compounds it using (1 + holding-period return)^(365 / days) − 1. The effective yield is slightly higher because it assumes the gain is reinvested.
Why does bond equivalent yield use 365 days?
The bond equivalent yield uses a 365-day (actual/365) year so short-term discount instruments can be compared directly with bonds, which quote yields on a 365-day basis. The bank discount rate, by contrast, is quoted on a 360-day year.

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