Bond Calculator Formula & How It Works
Price = C × [1−(1+r)^−n]/r + F/(1+r)^n
- C = Periodic coupon payment = Face Value × Coupon Rate ÷ Periods/year
- r = Required yield per period
- n = Number of remaining periods
- F = Face value (par value, typically $1,000)
Bond price equals the present value of all future coupon payments plus the present value of the face value at maturity. Bonds trade at par when market yield = coupon rate; at a discount when yield > coupon (market rates rose); at a premium when yield < coupon (market rates fell). Price and yield move inversely.