Bond Price Calculator
Calculate the fair market price of a bond based on face value, coupon rate, market yield, and years to maturity.
Bond Price
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Total Coupons
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Premium / Discount
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What is Bond Price Calculator?
A bond price calculator determines the present value of a bond's future cash flows — its periodic coupon payments plus the face value returned at maturity — discounted at the current market yield. When market yields rise above the coupon rate, bonds trade at a discount; when yields fall below the coupon rate, bonds trade at a premium.
How to use
- 1 Enter the bond's face value (typically $1,000).
- 2 Enter the annual coupon rate printed on the bond.
- 3 Enter the current market yield (required return) for similar bonds.
- 4 Enter the number of years remaining until the bond matures.
- 5 The fair price, total coupon income, and premium or discount versus face value appear instantly.
Formula
Example calculation
Face value $1,000, coupon rate 5%, market yield 6%, 10 years: Annual coupon = $50. Price = (50/0.06) × [1 − (1.06)^−10] + 1000/(1.06)^10 ≈ $926.40. Trading at a $73.60 discount because yield > coupon.
Frequently asked questions
Why does a bond price fall when interest rates rise?
Existing bonds pay a fixed coupon. When new bonds offer higher rates, existing bonds become less attractive. Their price falls until the effective yield to an investor matches current market rates.
What is a bond premium vs discount?
A premium bond trades above face value — its coupon rate exceeds current market yields. A discount bond trades below face value — its coupon rate is below current yields. At maturity, both converge to face value.
What is yield to maturity (YTM)?
YTM is the total return anticipated if the bond is held until maturity, factoring in coupon payments and the price difference from face value. It's the market's required rate of return for that bond's risk level.
Does this calculator assume annual or semi-annual coupons?
This calculator uses annual coupon payments for simplicity. Most US bonds pay semi-annually; for a more precise price on such bonds, halve the coupon and yield and double the periods.
What happens to bond price as maturity approaches?
Regardless of whether it started at a premium or discount, a bond's price gradually converges toward its face value as the maturity date approaches — a process called pull to par.