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What is bank discount yield(BDY)?

幫考網(wǎng)校 2020-10-13 16:26:54
Bank discount yield (BDY) is a measure of the annual percentage rate of return on a short-term investment, such as a Treasury bill or commercial paper, that is sold at a discount to its face value. It is calculated by subtracting the discounted purchase price from the face value of the investment, dividing that amount by the face value, and then multiplying the result by the number of days in the holding period. The result is then multiplied by a factor of 360 or 365 (depending on the convention used), to convert the yield to an annual percentage rate. BDY is often used as a benchmark for comparing the returns of different short-term investments.
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