Bond Price Calculator
We aim to help you calculate the bond prices issued by a government or a corporation with this bond price calculator.
bond price calculator
Coupon per period
Table of contents
What is a Bond Price? Understanding the dynamic behind the bond price equation
Before we go into how to calculate the current bond value using our bond valuation tool, let's talk briefly about what a bonds is. The most popular fixed-income securities, a bond, is one. A bond is a form of borrowing money from investors. While the bond market might not be as well-known than the stock market, it is still more popular than the stock market .
The bond issuer is essentially making a loan to you by purchasing a bond. It is one of the most important metrics for valuing a bond.
Let's take a look at some examples so you can understand how to calculate bonds prices.
The Bond price calculator results - more insight
Now you know the meaning of bond prices and how to calculate them. Here are some insights that we would like to share with your:
Bond prices are heavily affected by the economic environment, and especially rates. Bond prices fluctuate as central banks like the Federal Reserve and Bank of England alter their interest rate policies. In particular, the bond prices rise when interest rates fall and vice versa.
Bond prices are subject to change. They can either be higher or lower that their face value. This is due to the coupon rates and risks associated with the bond. The coupon rate is a factor that determines the price. The greater the risk of the bond, lower the price while keeping all other constant.
Corporate bond are generally more risky than similar bonds. Corporate bonds have credit risks because they could default. Government bonds are generally less sensitive to credit risk because they can print more money in order to repay their loans.
What is a Bond?
A bond is an debt security that is usually issued by a government and/or a corporation. It is sold to investors. Investors will buy the bond and lend the money to bond issuers. Investors will earn the return by getting coupons during the life of bonds and the maturity face value.
What is a Coupon?
A coupon is the interest that is paid on a bond. It is typically distributed annually or semi-annually, depending on which bond it is. It is typically calculated by adding the coupon rate to the face value of a bond.
What is the YTM and how does it work?
YTM stands for yield until the maturity of a bond. It's the return bond investor will get if the bond matures.
What is the face worth?
The principle can be used to refer to the bond's face value. It is the amount the bond investor will get at maturity if the bond issuer doesn't default. If the bond is held until maturity, it will be the last payment to the bond investor.
What happens to bond prices if the interest rate rises?
The YTM of the bond will increase if interest rates rise. The YTM will rise when:
The cash flows generated are discounted further;
Therefore, the bond prices will drop.
In the same way, a decrease in interest rates and a decrease in the YTM will lead to an increase of bond prices.
Parmis is a content creator who has a passion for writing and creating new things. She is also highly interested in tech and enjoys learning new things.
Bond Price Calculator English
Published: Tue Jul 26 2022
In category Financial calculators
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