Bond Equivalent Yield Calculator

Formula

The formula to calculate the Bond Equivalent Yield (BEY) is:

\[ BEY = \left(\frac{FV - P}{P}\right) \times \left(\frac{365}{d}\right) \]

Where:

$ BEY $ is the bond equivalent yield.
$ FV $ is the face value.
$ P $ is the current price.
$ d $ is the days to maturity.

Example

Let's say the face value ($ FV $) is $1,000, the current price ($ P $) is $950, and the days to maturity ($ d $) is 180. Using the formula:

\[ BEY = \left(\frac{1000 - 950}{950}\right) \times \left(\frac{365}{180}\right) \]

We get:

\[ BEY ≈ 0.1053 \times 2.0278 ≈ 0.2135 \]

So, the Bond Equivalent Yield ($ BEY $) is approximately 21.35%.

What is Bond Equivalent Yield?

Bond Equivalent Yield (BEY) is a financial metric used to calculate the annualized yield of a bond. It is a useful tool for investors to compare the yields of different bonds with varying maturities and coupon rates on an equal basis. BEY is particularly significant because it enables investors to make informed decisions about potential investments.