Bond Calculator
Calculate bond yield to maturity (YTM) and understand the relationship between bond prices and yields.
Bond Details
Bond Price vs Yield Curve
How Bond Calculations Work
Understanding Bonds
A bond is a fixed-income security that represents a loan made by an investor to a borrower (typically corporate or governmental). The bond issuer pays periodic interest payments and returns the principal at maturity. Our bond calculator helps you determine the yield to maturity (YTM), which is the total return anticipated if the bond is held until maturity.
Yield to Maturity (YTM)
YTM is expressed as an annual percentage rate and accounts for the bond's current market price, par value, coupon interest rate, and time to maturity. It's the most comprehensive measure of a bond's return.
Key Factors:
- Face Value (Par Value): The amount paid at maturity
- Current Price: What you pay for the bond today
- Coupon Rate: Annual interest rate paid
- Years to Maturity: Time until principal is repaid
Bond Price vs. Yield Relationship
Bonds have an inverse relationship between price and yield. When interest rates rise, bond prices fall (and vice versa). This is because existing bonds become less attractive when new bonds offer higher rates. The bond calculator visualizes this relationship with the yield curve chart.
Key Features
📊 Yield to Maturity
Calculate the total return you'll earn if you hold the bond until maturity, accounting for price, coupon, and time.
📈 Yield Curve Visualization
See how bond prices change with different yield rates using our interactive yield curve chart.
💰 Current Yield
Calculate the annual coupon payment divided by the current bond price, showing your immediate return.
⚖️ Premium vs. Discount
See if you're buying the bond at a premium (above face value) or discount (below face value) and how that affects returns.
Why Use a Bond Calculator?
Compare Bond Investments
Use the bond calculator to compare different bonds and determine which offers the best yield for your investment goals and risk tolerance.
Understand Total Return
YTM shows you the complete picture of bond returns, not just the coupon rate. This helps you make informed investment decisions.
Plan Bond Laddering
Calculate yields for different bonds in a ladder strategy to balance income, liquidity, and interest rate risk.
Tips for Bond Investing
1. Understand Interest Rate Risk
When interest rates rise, bond prices fall. Longer-term bonds are more sensitive to rate changes. Use the bond calculator to see how different maturities affect price sensitivity.
2. Compare YTM to Other Investments
Use the calculated YTM to compare bonds to other fixed-income investments like CDs or savings accounts. Consider risk, liquidity, and tax implications.
3. Consider Credit Risk
Higher yields often come with higher credit risk. Corporate bonds typically offer higher yields than Treasury bonds but carry default risk.
Bond Summary
Frequently Asked Questions
Related Calculators
- Annuity Calculator - Compare annuities to bonds
- Retirement Calculator - Plan retirement with bonds
- Interest Rate Calculator - Understand rate impacts