This bond calculator prices a bond the way the market does — by discounting its coupons and face value at the yield to maturity. Enter face value, coupon rate, years and required yield to get the price and current yield.
How Bond Pricing Works
A bond is a bundle of future payments: coupons along the way and the face value at maturity. Its price is simply the present value of all of them, discounted at the market’s required yield (the yield to maturity):
Price = Σ coupons ÷ (1 + r)ᵗ + face ÷ (1 + r)ⁿ
That one idea explains the bond market’s defining seesaw: when market yields rise, existing bond prices fall (their fixed coupons are worth less), and vice versa. This calculator is part of our Finance Calculators collection.
Worked Example (Verified)
A $1,000 bond, 5% annual coupon, 10 years to maturity:
- At a 6% yield: coupons are worth $50 × 7.3601 = $368.00, face is worth $558.39 → price $926.40 — a discount bond (92.64% of par), current yield 5.40%
- At a 4% yield: price rises to $1,081.11 — a premium bond
- At exactly 5%: price = $1,000.00 — par, as it must be when coupon and yield agree
Yield Vocabulary, Sorted
- Coupon rate: fixed at issue; coupon $ ÷ face value. Never changes.
- Current yield: annual coupon $ ÷ price you pay — what your money earns in income this year.
- Yield to maturity: the total return if held to maturity, including the pull of price back to par — the rate this calculator discounts at.
- Duration (awareness note): longer maturities swing harder when yields move — a 30-year bond’s price reacts roughly 3× more than a 10-year’s to the same rate change.
Related Tools
- Present Value Calculator — the engine inside this one
- Finance Calculators — the full collection
Frequently Asked Questions
How is a bond’s price calculated?
Discount every future coupon and the face value at the yield to maturity and add them up — a bond is exactly the present value of its payment stream.
Why do bond prices fall when interest rates rise?
Because new bonds then pay higher coupons. An old 5% bond must get cheaper until its overall yield matches the new 6% market — hence the discount in the worked example.
What does it mean when a bond trades at 92.64?
92.64% of face value — $926.40 on a $1,000 bond. Prices are quoted as a percentage of par.
What is the difference between current yield and yield to maturity?
Current yield counts only coupon income relative to price. YTM also includes the gain (or loss) as the price converges to face value at maturity — the fuller measure.
Are US bonds’ coupons really semiannual?
Yes — Treasuries and most US corporates pay twice a year, which is why the frequency option exists. It slightly raises price versus annual payment at the same stated yield.
Is this bond calculator free?
Yes — free, instant, no sign-up. It prices plain fixed-rate bonds; callable, floating-rate and zero-coupon bonds have their own quirks (a zero prices by the same formula with coupon = 0).