Bond Calculator
Calculate bond prices, yields, and returns
Last updated: January 2026
Bond Details
Bond Metrics
Yield Analysis
Understanding Bond Pricing
When market interest rates rise, bond prices fall, and vice versa. A bond trades at a premium when its coupon rate exceeds market rates, and at a discount when below market rates. US Treasury bonds are considered risk-free benchmarks.
Understanding Bonds
Face Value vs Market Price
A bond's face value (or par value) is the amount the issuer promises to pay back at maturity — typically $1,000 per bond. The market price is what investors are willing to pay for the bond today, which fluctuates based on interest rates, credit quality, and time to maturity. When a bond trades above face value, it is said to be at a premium. When it trades below, it is at a discount. At maturity, the bondholder receives the full face value regardless of the purchase price.
Yield to Maturity Explained
Yield to maturity (YTM) is the total annual return you would earn if you bought a bond at its current market price and held it until it matures. YTM accounts for the coupon payments you receive, plus any capital gain (if bought at a discount) or capital loss (if bought at a premium). It is the most comprehensive measure of a bond's return and is the standard metric used to compare bonds with different coupon rates, prices, and maturities.
Duration and Interest Rate Risk
Duration measures a bond's sensitivity to interest rate changes. A bond with a duration of 7 years will lose approximately 7% of its value if interest rates rise by 1%. Longer-term bonds have higher duration and are more sensitive to rate changes. This is why long-term Treasury bonds can experience significant price swings even though they carry no credit risk. Investors who plan to hold bonds to maturity are less affected by duration risk since they will receive the full face value at maturity.
US Treasury vs Corporate Bonds
US Treasury bonds are backed by the full faith and credit of the US government and are considered the safest fixed-income investments in the world. They serve as the benchmark for all other bonds. Corporate bonds are issued by companies and carry credit risk — the possibility the issuer may default. To compensate investors for this risk, corporate bonds offer higher yields. Investment-grade corporate bonds (rated BBB or above) are relatively safe, while high-yield ("junk") bonds carry significant default risk but offer substantially higher returns.
How Interest Rates Affect Bond Prices
Bond prices and interest rates have an inverse relationship. When market interest rates rise, existing bonds with lower coupon rates become less attractive to investors, causing their prices to fall. Conversely, when rates drop, existing bonds with higher coupons become more valuable, pushing their prices up. For example, if you hold a bond paying 4% and new bonds are issued at 5%, your bond's price must drop so that its effective yield matches the new market rate. This relationship is fundamental to understanding bond investing.
Frequently Asked Questions
What is yield to maturity (YTM)?
Yield to maturity is the total annual return you earn if you buy a bond at its current market price and hold it until it matures. YTM accounts for the coupon payments, the difference between purchase price and face value, and the time to maturity.
How do interest rates affect bond prices?
Bond prices and interest rates move in opposite directions. When interest rates rise, existing bonds with lower coupon rates become less attractive, so their prices fall. When rates drop, existing bonds with higher coupons become more valuable, pushing prices up.
What is the difference between current yield and yield to maturity?
Current yield is simply the annual coupon payment divided by the bond's current market price. YTM is more comprehensive — it also factors in any capital gain or loss if you hold the bond to maturity. YTM is generally considered the more accurate measure of total return.
What is the difference between US Treasury bonds and corporate bonds?
US Treasury bonds are backed by the full faith and credit of the US government and are considered virtually risk-free. Corporate bonds are issued by companies and carry credit risk — the possibility the company may default. Corporate bonds pay higher yields to compensate for this additional risk. Treasury interest is exempt from state income tax.
Are bonds a safe investment?
Bonds are generally less volatile than stocks but are not risk-free. Key risks include interest rate risk (prices fall when rates rise), credit/default risk (the issuer may not pay), and inflation risk (fixed payments lose purchasing power over time). US Treasury bonds are the safest, while high-yield corporate bonds carry significant credit risk.