Bond Price Calculator
Price any fixed-coupon bond from its coupon rate, term, and market yield. The result shows the clean price, current yield, total coupons over the holding period, and whether the bond trades at a premium or discount to par.
Bond price
£925.61
- Current yield
- 5.4%
- Total coupons if held to maturity
- £500.00
- Discount to face
- £74.39
Bond price is the present value of all remaining coupon payments plus the present value of the face value returned at maturity, both discounted at the market yield. When the coupon rate exceeds the market yield the bond trades at a premium; when it falls below it trades at a discount. Current yield is annual coupon divided by price and ignores the pull-to-par effect, so it differs from yield-to-maturity for non-par bonds.
How to use this calculator
Enter the face value (usually 1,000 in most markets), the stated annual coupon rate, the years remaining until maturity, the market yield you are pricing against, and how often the bond pays coupons. The calculator returns the price, the current yield based on that price, the cash coupons received if held to maturity, and the premium or discount versus face value.
How the calculation works
A bond is a stream of fixed coupon payments plus a face-value repayment at maturity. Its price today is the present value of all those future cash flows, discounted at the market yield. The closed-form expression is P = C · [1 - (1 + y)^-n] / y + F · (1 + y)^-n, where C is the coupon per period, y is the market yield per period (annual yield divided by frequency), n is the total number of periods (years × frequency), and F is the face value. When the coupon rate exceeds the market yield the bond is priced above face (premium); when it is below, the bond prices below face (discount); when they match, the bond prices at par.
Worked example
A 10-year, $1,000 face-value bond with a 5% annual coupon paying semi-annually, priced to yield 6%. Coupon per period C = (1,000 × 5%) / 2 = $25. Yield per period y = 6% / 2 = 3%. Total periods n = 20. The annuity factor [1 - 1.03^-20] / 0.03 = 14.8775, so PV of coupons = 25 × 14.8775 = $371.94. PV of the $1,000 face value = 1,000 × 1.03^-20 = $553.68. Price = 371.94 + 553.68 = $925.62 — a discount of $74.38, reflecting that the 5% coupon is below the 6% required yield.
Frequently asked questions
What is the difference between coupon rate and yield?
The coupon rate is fixed at issue — it is the stated annual interest the issuer pays as a percentage of face value. Market yield (yield to maturity) is the return an investor earns if they buy the bond at today's price and hold it to maturity. When market yields rise above the coupon rate, the bond price falls so the total return matches the new yield. When yields fall below the coupon rate, the price rises. Coupon is set in stone; yield moves with the market.
Why does a bond trade at a premium or discount?
The coupon is fixed but the required yield is not. If market yields drop after issue, the bond's coupon now looks generous, so investors bid the price above face — a premium. If yields rise, the coupon looks stingy and the price falls below face — a discount. At maturity the bond pays exactly face value, so any premium decays toward zero (and any discount is recovered) as the bond approaches maturity. This pull-to-par means current yield alone understates the return on a premium bond and overstates it on a discount bond.
How is current yield different from yield to maturity?
Current yield is simply annual coupon divided by current price. It ignores capital gain or loss between purchase and maturity. Yield to maturity (YTM) is the discount rate that equates the price to the present value of all cash flows — coupons and the face-value repayment — so it captures pull-to-par. For a bond priced at par, current yield and YTM are equal. For premium bonds, YTM is lower than current yield; for discount bonds, YTM is higher.
How often do bonds typically pay coupons?
Most US corporate and Treasury bonds pay semi-annually (twice a year). UK gilts also pay semi-annually. Many European government bonds pay annually. Some structured products and short-dated bonds pay quarterly or even monthly. The calculator supports annual, semi-annual, and quarterly. Choose the frequency stated on the bond's term sheet — using the wrong frequency will misprice the bond, sometimes by several percent.
Does this calculator handle accrued interest or clean vs dirty price?
No. The calculator returns the clean price assuming the bond is valued on a coupon-payment date — that is, with no accrued interest. The dirty price (the actual cash you would pay between coupon dates) equals clean price plus accrued interest, which depends on the day-count convention (30/360, Actual/Actual, Actual/360, etc.). For trade settlement-date pricing including accrued interest, use a dedicated dirty-price tool.
Can I use this for zero-coupon bonds?
Yes — enter 0 for the coupon rate. The calculator collapses to F / (1 + y)^n, the standard present-value formula for a zero-coupon bond. For example, a 5-year $1,000 face zero-coupon bond at 6% yield paying semi-annually prices to 1,000 / 1.03^10 = $744.09, a discount of $255.91 that the investor earns over the term.