Bond Pricing Calculator
Calculate bond prices, yields, accrued interest, and more for informed investment decisions
Bond Parameters
Enter any four values to calculate the fifth
Results
Bond Value Components
Coupon Payments
$0
Face Value
$0
YTM
0.00%
Term
0 years
Pricing Parameters
Enter bond details to calculate pricing
Pricing Results
Price Composition
Face Value
$1,000
Coupon Rate
5.0%
Term
5 years
YTM
4.5%
Understanding Bond Pricing
Bond pricing involves calculating the present value of a bond’s future interest payments and its maturity value. The price of a bond is inversely related to interest rates – when rates rise, bond prices fall, and vice versa.
Key Concepts:
- Face Value (Par Value): The amount paid to the bondholder at maturity
- Coupon Rate: The annual interest rate paid by the bond
- Yield to Maturity (YTM): The total return anticipated if the bond is held until it matures
- Dirty Price: The price of a bond including accrued interest
- Clean Price: The quoted price of a bond, excluding accrued interest
- Accrued Interest: Interest earned since the last coupon payment
How Bonds Are Priced:
Bond prices are determined by discounting the expected future cash flows (coupon payments and face value) back to the present using the yield to maturity. The formula for bond pricing is:
Price = Σ [C / (1+r)^t] + [F / (1+r)^n]
Where:
- C = Coupon payment
- r = Yield to maturity
- t = Time period
- F = Face value
- n = Number of periods to maturity
Why It Matters:
Understanding bond pricing helps investors evaluate fixed income investments, assess risk, and make informed decisions about buying or selling bonds in the secondary market.
“Bonds are the stabilizers in the portfolio of a prudent investor.”
This calculator provides estimates only. Actual bond prices may vary based on market conditions, credit risk, and other factors. Consider consulting a financial advisor before making investment decisions.