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BEY (Bond Equivalent Yield) of Short US Treasury Bill
What is BEY (Bond Equivalent Yield) of Short US Treasury Short Bill?
✍: FYIcenter.com
BEY (Bond Equivalent Yield), or Coupon Equivalent Yield,
of Short US Treasury Bill (T-Bill)
is the equivalent interest rate if you consider the price discount
as the interest and the purchase price as the investment capital.
Short T-Bills are T-Bills that mature in
less than and equal to one half-year.
Note that BEY is referred as Investment Rate, or Investment/Interest Rate, in some US Treasury documents.
The following formula defines the BEY in a very easy-to-understand form:
Different parts of the formula can be easily remembered as:
Of course, we can transform the about formula into different forms to calculate BEY, purchase price or face value:
Here is an example of 26-week T-Bill bought through TreasuryDirect.gov with a BEY (Bond Equivalent Yield) of 4.319%:
CUSIP: 912797NW3 Type: 26-Week Bill Par Amount: $10,000.00 (Face value) Purchase Price: $9,789.18 Investment/Interest Rate: 4.319% (BEY - Bond Equivalent Yield) Price per $100: 97.891833 Discount: $210.82 Issue Date: 2024-12-26 Maturity Date: 2025-06-26
We can use this example to verify the BEY (Bond Equivalent Yield) formula:
We have also provided a BEY (Bond Equivalent Yield) online calculator for you to use. Click this link "T-Bill 912797NW3 settled on 2024-12-26 with a price of 97.891833", you will see the BEY (Bond Equivalent Yield) of 4.3190% displayed.
Note that the BEY (Bond Equivalent Yield) formula uses the actual number of days in the year starting from the issue date. But a constant number of 360 days is used in the discount rate formula.
You can also find the BEY (Bond Equivalent Yield), also called Coupon Equivalent Yield, formula for short T-Bills in the "Price, Yield and Rate Calculations for a Treasury Bill" document provided by treasurydirect.gov.
Related topics:
⇒ BEY (Bond Equivalent Yield) of Long US Treasury Bill
⇐ High/Median/Low Rate of US Treasury Bill
2025-05-08, ∼560🔥, 0💬
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