Effective Annual Yield

As we already know that the number of compounding periods per year will affect the total interest earned. The Effective Annual Yield measures the yield of an investment if compounding happened annually.





EAY = (1 + HPY)^(365/t) - 1

  • HPY is Holding Period Yield
  • t is number of remaining Days to Maturity
  • EAY is Effective Annual Yield
Please refer to the Yields worksheet in Yields.xls

Next :
Money Market Yield (CD equivalent yield)

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