Bond Value Calculator to Calculate and Learn Valuation/Pricing

Bond Value Calculator Sign

This free online Bond Value Calculator will calculate the expected trading price of a bond given the par value, coupon rate, market rate, interest payments per year, and years-to-maturity.

Plus, the calculated results will show the step-by-step solution to the bond valuation formula, as well as a chart showing the present values of the par value and each coupon payment.

If you don't know the answer to the questions, "What are bonds?", "How do you calculate the value of a bond?", or "How do bonds work?", be sure to visit the Yield to Maturity Calculator page that includes a basic definition of bonds and a brief explanation of how they work.

Also on this page:

Bond Value Calculator

Calculate the expected trading price of a bond.

Learn More

Selected Data Record:

A Data Record is a set of calculator entries that are stored in your web browser's Local Storage. If a Data Record is currently selected in the "Data" tab, this line will list the name you gave to that data record. If no data record is selected, or you have no entries stored for this calculator, the line will display "None".

DataData recordData recordSelected data record: None
Par valuePar valuePar valuePar value ($):

Par value:

Enter the par value of the bond (only numeric characters 0-9 and a decimal point, no dollar sign or commas). Par value is also referred to as the face value.

Coup rateCoupon rateCoupon rateCoupon rate (%):

Coupon rate:

Enter the coupon rate of the bond (only numeric characters 0-9 and a decimal point, no percent sign). The coupon rate is the annual interest the bond pays. If a bond with a par value of $1,000 is paying you $80 per year, then the coupon rate would be 8% (80 ÷ 1000 = .08, or 8%).

Compound:Compounding:Rate compounding interval:Coupon rate compounding interval:

Coupon rate compounding interval

Select the compounding frequency of the coupon rate. Typically, the shorter the compounding interval, the more interest you will earn with all other factors remaining the same. While the effects of compounding are fairly insignificant for small investments, the effects can be very significant when investing a large sum of money.

Mkt rateMarket rateCurrent market rateCurrent market rate of similar bonds (%):

Current market rate of similar bonds:

Enter the current market rate that a similar bond is selling for (only numeric characters 0-9 and a decimal point, no percent sign). If the current market rate is below the coupon rate, then the bond should be trading at a premium (price greater than the par value). Conversely, if the current market rate is above the coupon rate, then the bond should be selling at a discount (price less than par value).

Yrs to matYrs to maturityYears to maturityYears to maturity (#):

Years to maturity:

Enter the number of years remaining before the bond reaches its maturity date (whole numbers only). The maturity of a bond is the year the par or face value of the bond is returned to the bond holder.

Bond value:Bond value:Bond value:Bond value:

Bond value:

Given the face value, coupon rate, coupon compounding interval, years to maturity, and the current market rate, this is the price your bond would be trading at. In other words, this should be the price a buyer would be willing to pay to purchase your bond.

If you would like to save the current entries to the secure online database, tap or click on the Data tab, select "New Data Record", give the data record a name, then tap or click the Save button. To save changes to previously saved entries, simply tap the Save button. Please select and "Clear" any data records you no longer need.

Help and Tools

Learn

What bond valuation is and how to calculate the value of a bond.

What is Bond Valuation?

Bond valuation is a method used to determine the expected trading price of a bond.

The expected trading price is calculated by adding the sum of the present values of all coupon payments to the present value of the par value (no worries, the bond value calculator performs all of the calculations for you, and shows its work).

How To Calculate The Value of a Bond

Since the value of a bond is equal to the sum of the present values of the par value and all of the coupon payments, we can use the Present Value of An Ordinary Annuity Formula to find the value of a bond.

Bond Valuation Example

Suppose XYZ issues ten-year bonds (par value of $1,000.00) with an annual coupon rate of 10% and paying interest semi-annually. Similar 10-year bonds are paying 12% interest. What is the value of one of XYZ's new bonds? In other words, what should the price be?

Variables
C = coupon payment = $100.00 (Par Value * Coupon Rate)
n = number of years = 10
i = market rate, or required yield = 12.000% = 0.12
k = number of coupon payments in 1 year = 2
P = value at maturity, or par value = 1000
Present Value of Ordinary Annuity Formula
BPBPBPBond Price = 
 C/k * 
[1 - [1]]
(1 + i/k)nk
i/k
 + 
P
(1 + i/k)nk
Plug In The Variables and Solve
BPBPBPBond Price = 
100/2 * 
[1 - [1]]
(1 + 0.12/2)10*2
0.12/2
 + 
1000
(1 + 0.12/2)10*2
BPBPBPBond Price = 
50 * 
[1 - [1]]
(1 + 0.06)20
0.06
 + 
1000
(1 + 0.06)20
BPBPBPBond Price = 
50 * 
[1 - [1]]
3.207
0.06
 + 
1000
3.207
BPBPBPBond Price = 50 *
1 - 0.3118
0.06
+
1000
3.207
BPBPBPBond Price = 50 *
0.6882
0.06
+311.80
BPBPBPBond Price = 50 *11.47+311.80
BPBPBPBond Price = 573.50+311.80
BPBPBPBond Price = $885.30
Or Solve Using Spreadsheet

You can also find the bond price using a spreadsheet to calculate and sum the present values of the par value and all of the coupon payments, like this:

End of YearInterestPrincipalPresent Value
0.50$50.00 $47.17
1.00$50.00 $44.50
1.50$50.00 $41.98
2.00$50.00 $39.60
2.50$50.00 $37.36
3.00$50.00 $35.25
3.50$50.00 $33.25
4.00$50.00 $31.37
4.50$50.00 $29.59
5.00$50.00 $27.92
5.50$50.00 $26.34
6.00$50.00 $24.85
6.50$50.00 $23.44
7.00$50.00 $22.12
7.50$50.00 $20.86
8.00$50.00 $19.68
8.50$50.00 $18.57
9.00$50.00 $17.52
9.50$50.00 $16.53
10.00$50.00 $15.59
10.00 $1,000.00$311.80
  TOTAL$885.30

Why Do Bond Prices Change?

Since the price of bonds trend in the opposite direction of interest rates, the price an investor is willing to pay for bonds tends to decrease as interest rates rise, and increase as interest rates decline. If this sounds confusing to you, perhaps a simple example will help clear the air.

Why Bond Prices and Interest Rates Move In Opposite Directions

To illustrate why bond prices and market interest rates tend to move in opposite directions, suppose you purchased a 5-year, $1,000 bond at face value that was paying a 7% coupon rate.

Now, suppose market interest rates rise, thereby causing bonds similar to yours to offer, say, an 8% coupon rate. If you were looking to sell your 7% bond, you would need to discount the price of your bond to the point where the buyer would achieve the same total return being offered by the bond paying 8%.

Using the bond valuation formula that's built into the bond value calculator, we can determine that an investor would need to be able to purchase your $1,000 bond for $960.07 in order to get the same total return as the one paying 8%.

On the other hand, suppose market interest rates fall, thereby causing bonds similar to yours to offer only a 6% coupon rate. If you were looking to sell your 7% bond, your bond is obviously worth more than bonds paying only 6%.

In this case, using the bond valuation formula we can see that an investor should be willing to purchase your $1,000 bond for $1,042.12, as that price would still net the investor the same total return as the one paying 6%.

Those two examples should help to explain why interest rates have an inverse relationship with bond prices. And it's a good thing they have this inverse relationship.

The Function of Price Fluctuations

The underlying reason bond prices rise and fall is to bring the rates of older bonds into line with prevailing rates. Were it not for these price fluctuations there would be no liquidity in the bonds market and very few issuers. After all, no one would be willing to buy bonds at par value if the bonds were paying lower interest rates than the prevailing rates, and issuers would not issue bonds if doing so would cause them to pay a higher interest rate than if they were to borrow the money elsewhere.

Maturities and the Effects of Interest Rate Changes

The more you use the bond value calculator, the more it should become clear that the effects that changing interest rates have on the price of a bond tend to become less and less the closer it gets to its maturity date. This is because the interest rate risk (risk of missing out on higher interest rates) decreases the closer bonds get to their maturity dates.

Adjust Calculator Width:

Move the slider to left and right to adjust the calculator width. Note that the Help and Tools panel will be hidden when the calculator is too wide to fit both on the screen. Moving the slider to the left will bring the instructions and tools panel back into view.

Also note that some calculators will reformat to accommodate the screen size as you make the calculator wider or narrower. If the calculator is narrow, columns of entry rows will be converted to a vertical entry form, whereas a wider calculator will display columns of entry rows, and the entry fields will be smaller in size ... since they will not need to be "thumb friendly".

Show/Hide Popup Keypads:

Select Show or Hide to show or hide the popup keypad icons located next to numeric entry fields. These are generally only needed for mobile devices that don't have decimal points in their numeric keypads. So if you are on a desktop, you may find the calculator to be more user-friendly and less cluttered without them.

Stick/Unstick Tools:

Select Stick or Unstick to stick or unstick the help and tools panel. Selecting "Stick" will keep the panel in view while scrolling the calculator vertically. If you find that annoying, select "Unstick" to keep the panel in a stationary position.

If the tools panel becomes "Unstuck" on its own, try clicking "Unstick" and then "Stick" to re-stick the panel.