Bond Equivalent Yield Calculator
Calculate the bond-equivalent yield of a Treasury bill or other discount instrument so you can compare it directly with semi-annual coupon bonds on a 365-day basis.
days
Annualized 365-day yield for comparison with semi-annual coupon bonds
- 1
Dollar discount
10,000 − 9,800 = 200 - 2
Holding period return
200 ÷ 9,800 = 0.020408Unannualized gain relative to the purchase price. - 3
Bond equivalent yield
0.020408 × 365 ÷ 182 × 100 = 4.0928Annualized on a 365-day basis and converted to a percentage.
How does this calculator work?
BEY converts a T-bill's dollar discount to a 365-day annualized yield: BEY = [(FV − P) / P] × (365 / t). Enter face value, purchase price and days to maturity to get BEY alongside the bank discount yield, money-market yield and effective annual yield for direct comparison with coupon bonds.
Formula
How this is calculated
T-bills and other discount instruments are quoted on a bank-discount-yield (BDY) basis using a 360-day year: BDY = [(FV − P) / FV] × (360 / t). To compare them with coupon bonds — which follow a 365-day, semi-annual compounding convention — analysts convert to the bond-equivalent yield: BEY = [(FV − P) / P] × (365 / t). The key differences are using the purchase price P (not face value FV) in the denominator, and switching to a 365-day year, both of which push BEY above BDY.
The holding-period return (HPR) is the raw unannualized gain: (FV − P) / P. BEY annualizes that linearly over 365 days. The effective annual yield (EAY) = (1 + HPR)^(365/t) − 1 compounds the HPR to a full year and is always slightly higher than BEY for short maturities. For quick market comparisons with coupon bonds, BEY is the standard convention used by CFA Institute and major fixed-income markets.
Assumptions: the instrument is held to maturity with no default risk; the 365-day BEY convention is standard in the US; some markets use 360-day or ACT/365 conventions instead. For maturities over 182 days the linear BEY annualization becomes less accurate — use a full YTM calculation instead.
Frequently asked questions
Two reasons: (1) BDY divides by face value FV, while BEY divides by the lower purchase price P — a smaller denominator gives a higher rate; (2) BEY uses 365 days while BDY uses 360. Both effects push BEY above BDY for the same instrument.
BEY is a market convention for comparing T-bills with coupon bonds in the US — it is a linear annualization, not a compounded return. EAY shows the true compounded annual return. Use EAY when comparing with instruments that reinvest returns during the year.
Caution is needed. The linear annualization in BEY = HPR × (365/t) becomes increasingly approximate beyond 182 days. For longer maturities use the full present-value yield-to-maturity formula or the EAY = (1 + HPR)^(365/t) − 1 calculation.
TG we-Calculate Editorial Team. (2026). Bond Equivalent Yield Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/bond-equivalent-yield-calculator
TG we-Calculate Editorial Team. "Bond Equivalent Yield Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/bond-equivalent-yield-calculator.
TG we-Calculate Editorial Team, "Bond Equivalent Yield Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/bond-equivalent-yield-calculator
@misc{wecalculate_bond_equivalent_yield_calculator, title = {Bond Equivalent Yield Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/bond-equivalent-yield-calculator}}, year = {2026}, note = {TG we-Calculate} }
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