Bond Calculator (Price and Yield)
Work out a bond's price or its yield to maturity.
Price and yield move in opposite directions
A bond pays fixed coupons and returns its face value at maturity. If market yields are lower than the bond’s coupon rate, the bond is worth more than its face value (it trades at a premium). If yields are higher, it is worth less (a discount).
Example
A bond with a face value of 1,000, a 5% coupon paid twice a year and 10 years to maturity, with a market yield of 4%, is worth about 1,081.76, a premium to its face value. Its current yield is about 4.62%. In the second tab, paying 1,081.76 for that bond gives a yield to maturity of 4%.
The price is the present value of every coupon plus the face value, discounted at the yield. The yield to maturity is the yearly return if you hold the bond until it matures and receive every payment. Default risk, taxes and call features are not included.
Frequently asked questions
What is current yield?
The yearly coupon divided by the price. It ignores the gain or loss at maturity.
Why does a bond's price fall when rates rise?
New bonds pay more, so older bonds with lower coupons must be cheaper to compete.
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