Using the Bond Calculator
Keep the coupon rate separate from the yield. The coupon determines the cash paid by the bond, while the yield is the return used to value those future payments today.
Worked example
Use the example inputs below to reproduce this result. These are the form's starting values, not recommended targets. Changing your inputs updates your result above; this worked example stays fixed for comparison. Results are rounded for display.
Example inputs
- Face value
- 1000
- Annual coupon rate (%)
- 5
- Annual yield (%)
- 4
- Years to maturity
- 10
Example result
- Bond price
- 1,081.76
Method and assumptions
Semiannual coupons; settlement exactly on a coupon date. Excludes accrued interest, default risk and embedded options.
Separate contributions from growth
An ending balance can grow because you put more money in, because the assumed return is higher, or because the money has more time to compound. Those are different effects. Keep the contribution schedule consistent when comparing rates, and distinguish a mathematical projection from a return that is contractually guaranteed. Fees and taxes need their own assumptions.
Common question
Why does a bond price fall when the yield rises?
A higher required yield discounts the same future cash payments more heavily. Their present value falls even though the promised coupon amounts have not changed.
Guide updated .