Effective Annual Yield Calculator

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Bond mode calculates EAY from a bond's face value and coupon payment. Rate mode converts a nominal rate to its effective annual equivalent.
The par or face value of the bond - the amount repaid at maturity.
USD
The total coupon dollars paid per year. For a $1,000 bond paying 5%, this is $50.
USD
How many coupon payments are made per year. Semi-annual (2) is the most common for US Treasury bonds.
Number of years to project the growth of a $10,000 investment. Used for the growth chart only.
years
Currency
Effective Annual YieldModerate yield
5.0625%

The annualised return accounting for the effect of compounding within the year.

Periodic rate0.025%
Coupon rate (nominal)0.05%
Yield gain from compounding0.0006%
Future value of $10,00012,800.85USD
5.0625% %
Very low<1%Low1%-3%Moderate3%-6%High6%-10%Very high10%+

Effective Annual Yield: 5.0625% (periodic rate: 2.5000%)

  • Your bond has a nominal coupon rate of 5.00%. By receiving payments Semi-annual and reinvesting them, the effective annual yield rises to 5.0625%.
  • Compounding adds 6 basis points (0.0625%) above the stated nominal rate - this is the compounding advantage.
  • At this effective yield, $10,000 grows to $12800.85 over 5 years.
  • When comparing two products with different compounding frequencies, always use the effective annual yield - the product with the higher EAY is genuinely more valuable, even if its nominal rate is lower.

Next stepThe periodic rate of 2.5000% applies to each Semi-annual coupon payment. To compare bonds or savings products fairly, always use the EAY, not the stated coupon or nominal rate.

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