A Treasury bill has 21 days to maturity and a bank discount yield of 1.89%. What is the bond equivalent yield?

Question

Quizplus · Accepted Answer

The bond equivalent yield (BEY) is calculated as follows:
BEY = (1 - BDY x D/360) x 365/D
where BDY is the bank discount yield and D is the number of days to maturity.
Plugging in the values, we get:
BEY = (1 - 0.0189 x 21/360) x 365/21 = 0.0192 or 1.92%
Therefore, the best choice is C, with a BEY of 1.92%.

A Treasury Bill Has 21 Days to Maturity and a Bank