How this calculator works
A bond’s price is the present value of its coupon payments plus the face value at maturity, discounted at the market yield.
Most US bonds pay coupons twice a year, so the yield and coupon are halved and the number of periods doubled.
YTM is the discount rate that makes that present value equal the price; it is found numerically.
Current yield is the annual coupon divided by the price, a simpler measure that ignores any gain or loss at maturity.
Worked example
$1,000 bond, 4% coupon, 10 years, market yield 5%
- Coupons: $20 every six months for 20 periods.
- Price: about $922, a discount because the coupon is below the market yield.
- Current yield: 4.34%.
Questions people ask
Why do bond prices fall when rates rise?
New bonds pay the higher rate, so older bonds with lower coupons must sell for less to offer the same yield.
What is the difference between coupon rate and yield?
The coupon is fixed when the bond is issued; the yield changes with the price you pay.
What is duration?
A measure of how sensitive a bond’s price is to rate changes. Longer maturities and lower coupons mean more price movement.
Are bond prices quoted in dollars?
Usually as a percentage of face value: a price of 92.2 means $922 per $1,000 bond.
Last reviewed October 2, 2026