Estimate bond pricing and yield relationships for fixed-income analysis.
Overview
Bond valuation links market price to expected cash flows from coupons and principal repayment. When required yield changes, bond prices move in the opposite direction.
This calculator helps investors evaluate whether a bond is trading at premium, discount, or near par. It is also useful for comparing coupon income versus yield-to-maturity outcomes.
Use caution with assumptions for callable, inflation-linked, or credit-sensitive bonds because their behavior can differ from plain fixed-rate instruments.
Steps
Input principal repaid at maturity.
Set annual coupon and payment schedule.
Define remaining life of the bond.
Use required return for discounting cash flows.
Discount coupons and principal to present value.
Compare current yield and yield-to-maturity context.
Math
Price = sum[C/(1+y)^t] + FV/(1+y)^n
A bond price equals the present value of periodic coupon payments plus the present value of face value repaid at maturity, discounted at market yield.
Worked cases
Discount cash flows at coupon-equivalent yield
Price is approximately at par value.
Higher discount rate lowers present value
Bond trades below par at a discount.
Lower discount rate increases present value
Bond trades above par at a premium.
Why use this
Questions