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Money Market Yield Calculator

Money market yield across conventions. Discount yield divides by face value and uses a 360 day year, so the same instrument quotes lower on that basis than on a bond equivalent basis.

Also called: treasury bill yield, commercial paper yield.

$
%
Yield convention
Effective annual yield
4.89%

4.89% effective annual yield from a quoted 4.8% on the bond equivalent basis. On 100,000 over 91 days that is $1,196.71. The conventions differ by 0.12% points, which is why comparing quoted yields directly is unsafe.

Return over the period
$1,196.71
Bond equivalent yield
4.8%
Discount yield
4.68%
Gap between conventions
0.12%
Value at maturity
$101,196.71
Convention used
bond equivalent
How this is calculated
Method and background

This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.

How this is calculated

Treasury bills and commercial paper are quoted on a bank discount basis: the return is divided by face value rather than by the price paid, and the year is taken as 360 days. Both choices make the quoted number lower than the return you actually earn. Bond equivalent yield divides by the price and uses 365 days, which is comparable to a bond. Effective annual yield compounds the period return. Comparing a discount quote against a deposit rate without converting is comparing different measures.

the discount convention divides by face value and uses a 360 day year, so it always reads lower
F
Face value
P
Price

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a 13 week Treasury bill

Amount invested
$100,000.00
Quoted yield
4.8%
Days to maturity
91
Yield convention
Bond equivalent

Effective annual yield4.89%

100,000 x 4.8% x 91/365 = 1,196.71, worked by hand on the actual/365 bond-equivalent convention

Open this example

a full year makes the conventions converge

Amount invested
$100,000.00
Quoted yield
4.8%
Days to maturity
365
Yield convention
Bond equivalent

Effective annual yield4.8%

boundary: at exactly 365 days there is no period to annualise, so every convention agrees

Open this example

Method and limits

What it assumes

  • A single period held to maturity.

What it deliberately does not model

  • Credit risk on commercial paper is real and is not in the yield.

Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator

Frequently asked questions

Why does the same instrument have three yields?
Different conventions. Discount divides by face value over a 360 day year, bond equivalent divides by price over 365, and effective annual compounds. All three describe the same cash flows.