CF LAB

Bond valuation

BONDS

For learning purposes only. Do not use this calculator or its data to make investment decisions. Results are simplified teaching examples.

What is this?

A bond is a loan you can buy and sell. The borrower pays a fixed coupon (interest) every year or half-year and repays the face value at the end. A bond is worth the present value of those payments, discounted at the return investors want today: the yield. When market yields rise, existing bonds become less attractive and their prices fall; when yields fall, prices rise.

Work out a bond’s price from a yield, or its yield to maturity from a price. Add a call option to see the yield to call.

How to read the charts

  • The blue curve shows the bond’s price at every yield. It slopes down: higher yield, lower price.
  • The dashed line is the face value. The curve crosses it where the yield equals the coupon rate.
  • The orange diamond is your bond.
  • In the timeline, each outlined bar is a payment, and the blue part is what it is worth today.
Chart ↓
Bond price
Current yield
What this means

Try this

The payments, and what each is worth today

How it’s calculated
On a financial calculator or in Excel