DEFINITION of 'Coupon Equivalent Yield - CEY'

A method of calculation used to calculate the yield on bonds with maturities of less than one year and which normally sell at a discount and do not pay coupons.

Formula

Coupon Equivalent Yield (CEY)

BREAKING DOWN 'Coupon Equivalent Yield - CEY'

For example, the CEY calculation allows bond investors to compare the return on a 180-day Treasury bill to a one-year coupon paying bond, to evaluate which instrument will give the investor a higher return.


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