A worked example
A $1,000 face-value bond with a 5% coupon, 10 years to maturity, priced against a 6% market yield, is worth about $925.61today — a discount, since the bond's fixed 5% coupon is less attractive than the 6% now available elsewhere.
Frequently asked questions
Why does a bond's price move opposite to interest rates?
A bond's coupon payments are fixed once issued. If market yields rise above that fixed coupon, new bonds look more attractive, so the old bond's price has to fall to offer a comparable return — and vice versa when yields fall.
What's the difference between coupon rate and current yield?
The coupon rate is fixed at issuance and based on face value. Current yield divides the annual coupon by the bond's current market price — since price moves, current yield moves too, even though the coupon payment itself doesn't change.
Why semi-annual payments by default?
Most bonds, especially U.S. Treasury and corporate bonds, pay interest twice a year — it's the market convention this calculator defaults to, though some bonds do pay annually or quarterly instead.
This calculator provides estimates for general informational purposes only and is not financial advice.