What is a 'Coupon Equivalent Yield (CEY)'
The coupon equivalent yield  CEY is used to calculate an annualized yield on Treasury bills, as well as on shortterm corporate bonds.
It is the stated rate of return on bonds without accounting for any compounding.
The coupon equivalent yield also is sometimes known as a bond equivalent yield.
BREAKING DOWN 'Coupon Equivalent Yield (CEY)'
The coupon equivalent yield  CEY is a simple rate of interest that takes into account the discounted purchase price of the bond. It allows investors to compare the return on, say a 60day Treasury bill to a oneyear couponpaying bond, or another similar security that pays an annual yield. Investors can use the coupon equivalent yield to calculate which investment results in better annualized performance.
The formula for calculating CEY is:
(The bond's face value  its current price) divided by its current price ) x (365/ days until the Treasury bill maturity)
For example, say a bond has a face value of $10,000, and its current price is $9.970. It has 60 days until maturity. Using the calculation, its coupon equivalent yield is 1.83%.
The coupon equivalent yield helps investors calculate what the return on a shortterm Treasury bill would have been, had they been able to collect the same rate of interest for a full year.
Of note, some investors also calculate a coupon equivalent yield for commercial paper and other shortterm corporate bonds. This requires a slightly different calculation, as follows:
(Interest expected for the period/ the bond price) x (365/ days until the bond matures)
In this example, say a bond with a $1,000 face value sells for $990. Annual interest is 2%. The bond matures in 60 days. If one interest is expected during the maturity period, then this payment will be $10.
($10/990) x (365/60)
In this instance, the bond's coupon equivalent yield is 6.14%.
Coupon Equivalent Yield vs. Effective Annual Yield
The coupon equivalent should not be confused with an effective annual yield, which takes into account compounding. The coupon equivalent yield is a nominal yield, so it does not use any compounding. It, therefore, gives a more conservative estimation of yield compared with an effective annual yield. The latter tends to be used in advertisements for shortterm investment returns, as the compounding tends to make the return look a bit better.

Gross Yield
The gross yield is the yield on an investment before the deduction ... 
Current Coupon Bond
A bond with a coupon rate that is within 0.5\% of the current ... 
Current Yield
Current yield is the annual income (interest or dividends) divided ... 
Bond Valuation
Bond valuation is a technique for determining the theoretical ... 
Bond Yield
Bond yield is the amount of return an investor will realize on ... 
Yield To Maturity (YTM)
Yield to maturity (YTM) is the total return expected on a bond ...

Investing
Understanding the Different Types of Bond Yields
Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment. 
Investing
Understanding Bond Prices and Yields
Understanding this relationship can help an investor in any market. 
Investing
How Do I Calculate Yield To Maturity Of A Zero Coupon Bond?
Yield to maturity is a basic investing concept used by investors to compare bonds of different coupons and times until maturity. 
Financial Advisor
Calculate PV of different bond type with Excel
To determine the value of a bond today — for a fixed principal (par value) to be repaid in the future — we can use an Excel spreadsheet. 
Managing Wealth
How Bond Prices and Yields Work
Understanding bond prices and yields can help any investor in any market. 
Personal Finance
6 Tricks To Make Coupons Work For You
Use these strategies to counteract the stores' and manufacturers' coupon tactics and come out ahead. 
Investing
The Benefits of a Bond Portfolio
Bonds are often viewed as stocks' lessglamorous sidekick, but they deserve more respect from investors. Learn how a fixedincome portfolio works. 
Investing
How To Evaluate Bond Performance
Learn about how investors should evaluate bond performance. See how the maturity of a bond can impact its exposure to interest rate risk. 
Investing
Understanding Interest Rates, Inflation And Bonds
Get to know the relationships that determine a bond's price and its payout.

What is the difference between yield to maturity and the coupon rate?
A bond's coupon rate is the actual amount of interest income earned on the bond each year based on its face value. Read Answer >> 
When is a bond's coupon rate and yield to maturity the same?
Find out when a bond's yield to maturity is equal to its coupon rate, and learn about the components of bonds and how they ... Read Answer >> 
If I buy a $1,000 bond with a coupon of 10% and a maturity in 10 years, will I receive ...
See how fixedincome security investors can expect to use coupon rates on semiannual payments if the bond or debt instrument ... Read Answer >> 
How do I use the holding period return yield to evaluate my bond portfolio?
Find out how to use the holding period return yield formula to evaluate the performance of bonds in your portfolio, and view ... Read Answer >> 
Learn to Calculate Yield to Maturity in MS Excel
Find out the best practices for most financial modeling to price a bonds, calculate coupon payments, then learn how to calculate ... Read Answer >>