📜 Bond Calculator
A bond is worth the present value of everything it will pay you: the regular coupon payments plus the face value returned at maturity, all discounted at the current market rate. When market rates rise above the coupon, the price falls below face value, and vice versa.
This calculator assumes annual coupon payments and a flat market rate for the bond's remaining life. Real bond pricing also reflects credit risk and call features, which are not modelled here.
How to use this calculator
Enter the bond's face value, coupon rate, years left to maturity and the current market rate to find its fair price.
- Enter the Face (par) value printed on the bond.
- Type the Annual coupon rate the bond pays.
- Set the Years to maturity and the current Market interest rate.
- Press Calculate to see the bond price and whether it trades at a premium or discount.
Frequently asked questions
How is a bond priced?
A bond is worth the present value of its future coupon payments plus the present value of the face value returned at maturity, all discounted at the market rate. For a $1,000 bond with a 5% coupon, 10 years left and a 6% market rate, the price is about $926.40.
Why would a bond sell below face value?
When the market rate rises above the bond's coupon rate, new bonds pay more, so the old bond must drop in price (a discount) to offer buyers the same yield. The reverse creates a premium.
What assumptions does this calculator make?
Annual coupon payments and a flat market rate for the bond's remaining life. Credit risk, call options and tax treatment are not modelled.
What does the premium or discount row mean?
It is the difference between the computed price and face value. A $926.40 price on a $1,000 face value shows as a $73.60 discount.