The bond equivalent yield (BEY) is the total yield on investments that takes into account the interest applicable on bonds, which is the simple interest (uncompounded) semiannual bond yield on the actual/actual day-count basis. It is used to compare bonds with financial instruments having varying characteristics that mature on the same date. Quoting bond equivalent yields makes the semiannual-pay YTM of US Treasury notes and bonds directly comparable to the quoted yields of other financial instruments that are based on another payment frequency or yield basis.
If the bond equivalent yield is known, the following equation is used to determine the effective annual yield (EAY) of the instrument, where t is the remaining time to maturity:
EAY = {(1 + [BEY x (t/360)]}(365/t)
US Treasury curve rates are bond equivalent yields. A yield curve rate is an interest rate at a given point along a yield curve. The daily yield curve of the US Treasury plots the current and past secondary market yields on actively traded Treasury securities that pay interest on a semiannual basis. It is a par yield curve since it is derived from the yield to maturity on Treasury securities that trade at par.