Calculator Inputs
Example Data Table
| Instrument | Face Value | Purchase Price | Days | Approx. BEY | Use Case |
|---|---|---|---|---|---|
| Treasury Bill A | 10,000 | 9,750 | 90 | 10.40% | Short holding period comparison |
| Treasury Bill B | 10,000 | 9,850 | 120 | 4.63% | Lower discount, longer maturity |
| Commercial Paper Sample | 5,000 | 4,925 | 45 | 12.35% | Fast annualized screening |
These examples show how price and time jointly affect annualized discount-security yields.
Formula Used
BDY = ((Face Value − Purchase Price) ÷ Face Value) × (Bank Basis ÷ Days to Maturity)
HPY = (Face Value − Purchase Price) ÷ Purchase Price
BEY = HPY × (Annual Basis ÷ Days to Maturity)
MMY = HPY × (Bank Basis ÷ Days to Maturity)
EAY = (Face Value ÷ Purchase Price)^(Annual Basis ÷ Days) − 1
Adjusted Net BEY = ((Net Ending Value − Initial Cost) ÷ Initial Cost) × (Annual Basis ÷ Days)
Standard BEY is useful for comparing discount instruments on a bond-style annual basis. Adjusted BEY is useful when fees, taxes, or transaction costs matter.
How to Use This Calculator
- Choose whether you want to enter the purchase price or a quoted bank discount rate.
- Enter the face value and days remaining until maturity.
- Add optional purchase fees, redemption fees, and tax rate assumptions.
- Set your preferred annual basis and bank discount basis.
- Enter the quantity to estimate portfolio-level cash flows.
- Press Calculate Yield to display results above the form.
- Review the summary table, chart, and interpretation note.
- Export the results using CSV or PDF when needed.
Frequently Asked Questions
1) What does bond equivalent yield measure?
Bond equivalent yield annualizes the return from a discount security using a bond-style convention. It helps compare Treasury bills or commercial paper against other fixed-income opportunities on a similar basis.
2) Why is BEY different from bank discount yield?
Bank discount yield uses face value in the denominator and usually a 360-day basis. BEY uses purchase price instead, which usually produces a higher and more investment-focused annualized figure.
3) When should I use purchase price mode?
Use purchase price mode when you know the actual trade cost per bond. It reflects the cash you spend and is the best starting point for calculating market-comparable annualized returns.
4) When is discount rate mode useful?
Discount rate mode is useful when the instrument is quoted on a bank discount basis. The calculator first derives the implied purchase price, then converts that into BEY and related yield measures.
5) Should fees and taxes be included?
Yes, when you want a more realistic net return estimate. Standard BEY ignores those adjustments, but practical investment decisions often benefit from the fee-adjusted and tax-adjusted outputs.
6) Why does the chart use price sensitivity?
Price sensitivity shows how annualized yields change when the entry price changes. It helps you see whether a small difference in purchase cost meaningfully changes screening decisions.
7) Is BEY the same as yield to maturity?
No. BEY is a simple annualized return convention commonly used for discount instruments. Yield to maturity is broader and can include coupon payments, reinvestment assumptions, and more complex pricing behavior.
8) Which instruments fit this calculator best?
This calculator is best for Treasury bills, discount notes, and commercial paper. It is less suitable for coupon bonds where full yield-to-maturity methods are usually more appropriate.