Bond Equivalent Yield Calculator

It annualises the return on a discount instrument like a T-bill. A bill bought at 98 with a face of 100 maturing in 90 days yields about 8.28%.

The bond equivalent yield uses a 365-day year so a discount instrument can be compared with coupon bonds. It restates a short-term gain as an annual rate.

Bond equivalent yield, or BEY, is a way to express the return on a short-term discount instrument as a yearly rate. Some bonds and bills pay no interest along the way, instead you buy them below their face value and collect the full face at maturity, and that gain is your return. BEY takes that gain over a few months and scales it up to what it would be over a whole year. This lets you compare a short bill against longer investments on the same yearly footing.

It takes the discount, meaning face value minus purchase price, divides it by the price to get the holding-period return, then multiplies by 365 divided by the days to maturity to annualize it. So a bill with a face of 100, a price of 98, and 90 days to maturity gives a discount of 2, a return of about 2 percent over 90 days, and a bond equivalent yield of roughly 8.28 percent a year. The result is shown as a percent.

It assumes a simple discount instrument that pays no coupons and is held to maturity, so it does not handle interest-paying bonds. It uses simple annualization with a 365-day year and no compounding, which keeps the number easy but slightly stylized. It also assumes the full face value is paid back at maturity with no default. So treat BEY as a clean way to compare short bills, not a complete bond pricing model.