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Bond Price Calculator

Price a fixed-rate bond from its face value, coupon rate, market yield, and years to maturity — with premium/discount status and current yield.

Bond price
$925.61
Status
Trading at a discount (below face value)
Present value of coupons
$371.94
Present value of face value
$553.68
Coupon payment per period
$25.00
Total coupons paid over life
$500.00
Current yield
5.4%

How it works

A bond's price is the present value of everything it pays you: each coupon, plus the face value returned at maturity. This calculator discounts both at the market yield: price = C·(1 − (1+y)⁻ⁿ) ÷ y + F ÷ (1+y)ⁿ, where C is the coupon payment per period, y is the yield per period (annual yield ÷ payments per year), n is the total number of periods, and F is the face value — the first term is the present value of the coupon annuity, the second is the present value of the lump-sum face value.

When the coupon rate equals the market yield, the two present values combine to exactly the face value — the bond trades 'at par.' When the market yield is higher than the coupon rate, the fixed coupons are worth less than a bond issued at today's rate, so the price falls below face value ('at a discount'); when yield is lower than the coupon rate, the bond is worth more than face value ('at a premium').

Current yield (annual coupon ÷ price) is also shown for reference — it's a simpler, less complete measure than yield to maturity, since it ignores the gain or loss from the price converging to face value by maturity.

FAQ

Why does a bond's price move opposite to interest rates?

A bond's coupon payments are fixed at issuance. If market yields rise after issuance, new bonds pay more, so an existing bond with a lower fixed coupon must sell for less to offer a comparable return — its price falls. If market yields fall, the existing bond's fixed coupon looks relatively attractive, so its price rises. This inverse relationship is built directly into the discounting formula: a higher y in the denominator produces a lower present value.

What's the difference between coupon rate and yield?

The coupon rate is fixed at issuance and determines the dollar amount of each coupon payment (as a percentage of face value) — it never changes. Yield to maturity is the market's current required rate of return for a bond like this one, which changes with market conditions and is what actually determines the bond's price today.

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