Why is the bond price different from its face value?

When the market rate differs from the bond's coupon rate, the bond trades at a premium or discount to face value. If the market rate is higher than the coupon rate, as in this example's 6% market vs 5% coupon, the price falls below face value because its fixed coupons are less attractive than what new bonds offer.

Does this calculator include accrued interest?

No, it calculates the "clean" bond price, the present value of coupons plus face value at maturity, as of a coupon payment date. It doesn't add accrued interest for a purchase between coupon dates, which is needed to get the "dirty" price actually paid in a real transaction.

Bond Calculator

Calculate a bond's price and current yield from its coupon rate and market rate.

How this is calculated

Price = Σ coupon ÷ (1+r)ᵗ + face value ÷ (1+r)ⁿ

Assumptions used in this calculation

Coupon frequency: Assumes annual coupon payments.

About this calculator

Calculates a bond's price (present value of coupon payments plus face value) and current yield, given its face value, coupon rate, years to maturity, and market discount rate.

Worked example

₹1,000 face value, 5% coupon, 10 years, 6% market rate

Result: Bond price ≈ ₹926.40

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Frequently asked questions

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About this calculator

Frequently asked questions

Why is the bond price different from its face value?

Does this calculator include accrued interest?

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