Glossary of Municipal Securities Terms

BOND EQUIVALENT YIELD

The return on a discounted security figured on a basis that permits comparison with interest-bearing securities. For a short-term (under six months) discounted security, the bond equivalent yield is an annualized rate of return. For a longer term discounted security, the bond equivalent yield is determined by a computation that adjusts for the absence of periodic payments over the life of the security. See: DISCOUNTED SECURITY.

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