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Bond Equivalent Yield (BEY) Calculator

Calculate the bond equivalent yield (BEY) of short-term discount securities.

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Calculation Parameters

Specify your inputs below.

Calculated Result

Bond Equivalent Yield (BEY) 5.20%
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Expert Tip

BEY allows comparison of short-term bills and discount paper to standard coupon-bearing bonds on an annualized basis.

How this Calculator Works

This calculator computes the Bond Equivalent Yield (BEY), which annualizes the yield of short-term bills (like Treasury bills) that pay interest on a discount basis. It allows investors to compare short-term money market instruments with annual bond yields.

Formula & Methodology

BEY = [ (Par Value - Purchase Price) / Purchase Price ] * (365 / Days to Maturity) * 100 - Par Value is the face value received at maturity. - Purchase Price is the discount price paid to buy the bill. - Days to Maturity is the days remaining in the bill's term.

Step-by-Step Calculation Example

Here is a step-by-step example showing how the calculations are performed:

You buy a 180-day Treasury bill with a par value of $10,000 for $9,800. 1. Calculate discount ratio: ($10,000 - $9,800) / $9,800 = 0.0204. 2. Calculate time ratio: 365 / 180 = 2.0278. 3. Multiply ratios and 100: 0.0204 * 2.0278 * 100 = 4.14%. Result: The Bond Equivalent Yield (BEY) is 4.14%.

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Detailed Insights & Expert Guide

ℹ️ About this Calculation

This fixed income and debt investment calculator analyzes bond pricing, coupon yield to maturity (YTM), Macaulay/modified duration, credit risk spreads, and debt coverage ratios based on Wall Street fixed income analytics.

Variable Glossary

Input

Fixed Income Data

Par value ($1,000), coupon rate %, payment frequency, maturity years, corporate credit spread, or tax rate %.

Parameter

Bond Performance

Yield to Maturity (YTM %), present bond price ($), modified duration (years), or Tax-Equivalent Yield (TEY).

How to Calculate Step-by-Step

1

Step 1

Input bond face value, annual coupon interest rate, or corporate credit default swap (CDS) basis points.

2

Step 2

Select payment schedule frequency (annual, semi-annual) and years remaining until maturity date.

3

Step 3

Review calculated yield to call/maturity, interest rate sensitivity duration, or debt service coverage (DSCR).

FAQ

How does bond duration measure interest rate risk?
Modified duration estimates the approximate percentage change in a bond's price for a 1% (100 bps) shift in interest rates. Higher duration indicates greater price sensitivity to rate moves.
What is Tax-Equivalent Yield (TEY) for municipal bonds?
Tax-Equivalent Yield = Municipal Tax-Exempt Yield / (1 - Marginal Tax Rate). It shows the pre-tax yield a taxable bond would need to equal the after-tax yield of a tax-free municipal bond.
Can fixed income calculators guarantee bond trading outcomes?
No. Bond pricing models assume clean compounding yields and fixed reinvestment rates. Secondary market prices fluctuate based on liquidity, credit rating revisions, and market interest rate movements.