Bond equivalent yield


Bond equivalent yield

Bond yield calculated on an annual percentage rate method. Differs from annual effective yield.

Bond Equivalent Yield

The non-annual yield of a bond expressed in annual terms. The bond equivalent yield helps an investor compare the return of a bond that pays a coupon on an annual basis with a bond with semi-annual, quarterly, or any other coupons. It is calculated thusly:

Bond equivalent yield = ((face value - purchase price) / purchase price) * (365 / days until maturity). See also: Annual Percentage Rate.