Bond-Equivalent Yield (BEY)
Annualized yield computed by doubling the semi-annual periodic yield. The US Treasury convention for quoting yields on coupon bonds and (with adjustments) for converting other yield bases to a comparable Treasury basis.
When to use: Use to convert a known semi-annual periodic yield to its annualized BEY quote, or to express any bond's yield in a Treasury-comparable form. BEY is what shows up in Treasury auction results and yield tables.
Formula
Variables
| Symbol | Name | Description | Unit |
|---|---|---|---|
| BEY | Bond-Equivalent Yield | Annualized yield using the US-Treasury convention of doubling the semi-annual yield | % |
| YSemi | Semi-Annual Yield | Yield earned per six-month period as a decimal | % |
Real-Life Examples
Example 1: Treasury Note 2.5% per Period
A semi-annual bond yields 2.5% per six-month period.
Given
Step-by-Step
The BEY quote is 5%. Because BEY does not compound the semi-annual yield, it is slightly below the effective annual yield (1.025² − 1 = 5.0625%) — a 6.25 bp gap that grows with rate level.
Frequently Asked Questions
Convention. The Treasury market quotes nominal-annual rates compounded semi-annually, so BEY (which is just 2 × y_semi) is the lingua franca. Effective annual yield is mathematically tighter but isn't the convention.
BEY = 2 × [(1 + EAY)^(1/2) − 1]. Effective yield 5.0625% → BEY = 2 × (1.025 − 1) = 5.00%, recovering the original quote.
T-bills are quoted on a discount-rate basis with ACT/360 day-count, not semi-annual BEY. Convert depends on tenor. For bills of 182 days or fewer (the short form): BEY = (365 × d) / (360 − d × t), where d is the discount rate and t is days to maturity. For bills longer than 182 days the SIFMA convention requires the quadratic form: BEY = [−2t/365 + 2 × √((t/365)² − (2t/365 − 1) × (1 − 1/(1 − d·t/360)))] / (2t/365 − 1), which accounts for intra-year compounding the short form ignores. Both produce figures comparable to coupon-bond BEY.