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Bond Equivalent Yield:
What does Bond Equivalent Yield mean?
The bond equivalent yield formula is used to determine the annual yield on a discount, or the zero coupons, bond. While making investment decisions, comparing the yield or returns on the investment choices in relative terms is important.
Bond Equivalent Yield = ((Par Value - Price) / Price) * (365 / d) * 100
A bond has a par value of $2,000, purchased at a discounted price of $1,900 and has 100 days to maturity.
According to the formula, Bond Equivalent Yield is:-