![]() When the central banks, such as the Federal Reserve and the Bank of England, change their interest rate policies, the bond prices fluctuate. Here are a few insights we wish to share with you:īond prices are massively affected by the macroeconomic environment, especially interest rates. Now that you understand the meaning of bond price and how to find bond price. In our bond price calculator, you can follow the present values of payments on the bond price chart for a given period. In this example, YTM = 8%.Īs mentioned above, the bond price is the net present value of the cash flow generated by the bond and can be calculated using the bond price equation below:īond price = $50 / (1 + 8%) 1 + $50 / (1 + 8%) 2 + $50 / (1 + 8%) 3 +. The YTM is the annual rate of return that the bond investor will get if they hold the bond from now to when it matures. The n is the number of years it takes from the current moment to when the bond matures. ![]() It can be calculated using the following formula:Ĭoupon per period = face value * coupon rate / frequencyĪs this is an annual bond, the frequency = 1. To calculate the coupon per period you will need two inputs, namely the coupon rate and frequency. The face value is the balloon payment a bond investor will receive when the bond matures. The bond valuation calculator follows the steps below: ![]() Let's take Bond A issued by Company Alpha as an example. Frequency - The coupon frequency, i.e., the number of times the coupon is distributed in a year. ![]() To use bond price equation, you need to input the following data to our current bond price calculator: You can see how it changes over time in the bond price chart in our calculator. Bond price is calculated as the present value of the cash flow generated by the bond, namely the coupon payment throughout the life of the bond and the principal payment, or the balloon payment, at the end of the bond's life. ![]()
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