Calculate a bond's fair price from its face value, coupon rate, years to maturity, and market yield (YTM). See the price, total coupon income, current yield, and whether it trades at a premium or discount.
Price & yield of a fixed-coupon bond
A bond's fair price is the present value of all its future cash flows — the periodic coupon payments plus the face value repaid at maturity — discounted at the market yield (yield to maturity, or YTM). When the YTM equals the coupon rate, the bond is worth exactly its face value (par). When market yields rise above the coupon rate, the bond is worth less than par (a discount); when yields fall below the coupon rate, it's worth more than par (a premium). This inverse relationship between yields and prices is the central fact of bond investing.
For example, a $1,000 bond with a 5% coupon paid semi-annually, maturing in 10 years, priced to a 6% market yield, is worth about $925.61 — a discount, because newer bonds offer a higher 6% yield. The calculator also shows the current yield (annual coupon ÷ price) and total coupon income over the bond's life.
When market yields rise, existing bond prices fall, and vice versa. Longer maturities are more sensitive to yield changes.
Coupon > YTM → premium (price above par). Coupon < YTM → discount (price below par). Coupon = YTM → par.
Annual coupon ÷ current price. A quick income measure, though YTM is the complete return including price changes to maturity.
A bond's price is the present value of its future cash flows: periodic coupons plus the principal returned at maturity, all discounted at the yield the market currently demands. Because the coupon is fixed and the discount rate moves, price and yield are inversely related — when market rates rise, existing bonds must fall in price until their effective yield matches. That is the whole mechanism behind bond fund losses in a rising-rate environment, and it is why duration, which measures price sensitivity to rate changes, matters more than coupon for anyone who might sell before maturity.
Price = Σ [ Coupon ÷ (1 + y)^t ] + Face ÷ (1 + y)^nCurrent yield = Annual coupon ÷ PriceTrades at a discount when coupon < yield; at a premium when coupon > yieldApproximate price change ≈ −Duration × change in yieldwhere:
Assumptions: Assumes coupons are reinvested at the yield to maturity, which rarely holds exactly. Credit risk is not modelled — a higher yield often reflects default risk rather than a bargain.
Price a bond whose coupon is below current market yield.
Result$946.47 — a $53.53 discount to par
The discount is not a bargain; it is the market repricing a below-market coupon so the total return matches 5.2%. Note the asymmetry of the rate move: a 0.7-point rise cost $53.53 while a 1.2-point fall would gain $94.08, which is convexity working in the holder's favour.