The Bond Calculator works out the price of a bond from its yield, or its yield to maturity from its price, using face value, coupon, coupon frequency and time to maturity.
| Price | $97.33 |
| Yield | 6.000% |
| Coupon per period | $5.00 |
| Number of coupon payments | 3 |
| Discount | $2.67 |
A bond is a loan to a government or company. The issuer promises to pay regular interest, called the coupon, and to repay the face value (par) on the maturity date. Bonds can be bought and sold before maturity, and their market price moves as interest rates change.
A bond's price is the present value of all its future cash flows discounted at the market yield: Price = Σ C ÷ (1 + y/m)^t + Face ÷ (1 + y/m)^n, where C is the coupon per period, m the number of payments per year and n the total number of payments.
Worked example (defaults): a $100 face bond with a 5% annual coupon, 3 years to maturity and a 6% yield. Price = 5/1.06 + 5/1.06² + 105/1.06³ = $97.33. Because the yield is above the coupon, the bond sells at a discount.
If you know the price, the yield to maturity (YTM) is the single discount rate that makes the cash flows equal that price. It is the return you earn if you buy now, hold to maturity and reinvest coupons at the same rate. The calculator finds it by repeated trial.
When market rates rise, existing bonds with lower coupons become less attractive and their prices fall; when rates fall, prices rise. Longer bonds and lower coupons are more sensitive, which is measured by duration. Bonds priced above par trade at a premium; below par at a discount.
Between coupon dates the buyer pays the seller the interest that has built up since the last coupon (accrued interest). Quotes usually show the clean price without it; the dirty price includes it. Day-count conventions such as 30/360 or Actual/365 decide how accrued interest is counted.
Is a higher yield always better? Higher yields usually mean higher risk of default or longer maturity.
What is a zero-coupon bond? One that pays no coupons and is sold at a deep discount; set the coupon to 0.
Are bond prices quoted per $100? Usually yes, as a percent of face value.