Bond Calculator
$0.00 bond price
How Bond Pricing Works
A bond's fair price is the present value of all its future cash flows — the periodic coupon payments plus the face value returned at maturity — discounted at the current market interest rate (yield). When the coupon rate equals the market rate, the bond prices at exactly its face value ("par"). When the market rate rises above the coupon rate, the bond's fixed payments become less attractive, so the price drops below face value (a "discount"). When the market rate falls below the coupon rate, the bond becomes more attractive and trades above face value (a "premium"). This calculator assumes coupon payments are reinvested at the same rate and that the bond is held to maturity, which is the standard simplifying assumption used in textbook bond pricing.
Price vs. Yield: An Inverse Relationship
Bond prices and interest rates always move in opposite directions. If you're deciding between locking in a fixed-income investment now versus waiting, remember that rising rates in the broader economy will push existing bond prices down, while falling rates push them up. This is also why the "current yield" shown above (annual coupon divided by price paid) differs from the market yield you enter once the bond trades away from par.
Comparing Bonds to Other Fixed-Income Options
If you're weighing a bond purchase against a bank product with a guaranteed rate and no market-price risk, the CD calculator can help you compare outcomes. For a broader look at how compounding and time horizon affect any lump-sum investment, try the present value calculator.
Frequently Asked Questions
Why is the calculated bond price different from the face value?
The price only equals face value when the coupon rate exactly matches the current market interest rate. If the market rate is higher than the coupon rate, the bond trades at a discount (below face value) because its fixed payments are less attractive than what new bonds offer. If the market rate is lower, the bond trades at a premium (above face value).
What coupon frequency should I choose?
Most corporate and government bonds, including U.S. Treasury notes and bonds, pay interest semiannually, which is the default here. Check your bond's prospectus or trade confirmation for the actual schedule, since municipal and some international bonds may pay annually, quarterly, or monthly.