Bond Price Calculator
This bond price calculator works out what a bond is worth today by discounting all of its future cash flows back to the present at the market yield you expect. A bond pays you a fixed coupon each period and returns its face value at maturity, and its fair price is simply the present value of that stream: every coupon and the final repayment is discounted by the yield, and the pieces are added together. Enter the face, or par, value, the annual coupon rate, the number of years to maturity, the market yield used for discounting, and how often coupons are paid, and the calculator returns the price along with the present value of the coupons and the present value of the face value shown separately. The relationship between price and yield is the heart of bond investing: when the market yield sits above the coupon rate the bond is worth less than face value and trades at a discount, and when the yield is below the coupon rate it trades at a premium. This tool is built for investors comparing bonds, students learning fixed-income maths, and anyone checking whether a bond on offer looks fairly priced. It is an indicative estimate that ignores tax, brokerage and accrued interest between coupon dates, so treat the figure as a guide rather than a settlement price.
At a 6% yield this bond is worth $926.40, a discount to its $1,000.00 face value, because its coupon rate is below the market yield.
Price is the present value of the coupons plus the present value of the face value, discounted at the market yield. Ignores tax, brokerage and accrued interest. Indicative estimate, not financial advice.
How it works
A bond is a set of dated cash flows: a coupon each period plus the face value at the end. To price it you discount every cash flow back to today at the market yield. The coupons form an annuity, worth the coupon times the annuity factor for the yield and number of periods, and the face value is a single sum worth face divided by one plus the yield raised to the number of periods. Adding the two gives the price. Because a higher yield discounts those future dollars more heavily, price and yield always move in opposite directions, and the size of the swing grows with the time to maturity.
Worked example
Take a $1,000 bond with a 5% annual coupon, 10 years to maturity, priced to a market yield of 6%, paying once a year. Each coupon is $50. The annuity factor for 6% over 10 years is about 7.3601, so the coupons are worth 50 times 7.3601, which is about $368.00. The face value of $1,000 discounted over 10 years at 6% is 1,000 divided by 1.06 to the tenth power, which is about $558.39. Adding them gives a price of about $926.40, below face value because the 5% coupon is below the 6% market yield, so the bond trades at a discount.
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