Bond Price from YTM
Computes the price of a coupon bond from its yield to maturity, discounting all future coupons and the face value to present: P = C·[1 − (1+i)^(−n)]/i + F·(1+i)^(−n). It's the inverse of computing the YTM and the foundation of fixed-income pricing. When the coupon exceeds the YTM, the bond trades at a premium; when below, at a discount. The calculation divides coupon and yield by the payment frequency. Enter the face value, the coupon rate, the YTM, the years and the coupons per year.
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Bond Price from YTM
Computes the price of a coupon bond from its yield to maturity, discounting all future coupons and the face value to present: P = C·[1 − (1+i)^(−n)]/i + F·(1+i)^(−n). It's the inverse of computing the YTM and the foundation of fixed-income pricing. When the coupon exceeds the YTM, the bond trades at a premium; when below, at a discount. The calculation divides coupon and yield by the payment frequency. Enter the face value, the coupon rate, the YTM, the years and the coupons per year.
From yield back to price
Everyone learns to compute a bond's yield from its price. The reverse path is just as important and more common day to day: given a market yield, what is the paper worth? The answer is to bring each future coupon and the face value to present value, discounting everything at the required rate. It's the foundation of all fixed-income pricing.
The relationship between coupon and yield decides whether the bond trades at a premium or a discount. When the coupon pays more than the market yield, the paper is worth more than face and trades at a premium. When it pays less, it trades at a discount. And when the two match, the price hits face value exactly. This balance is what makes bond prices fall when rates rise.
Enter the face value, the coupon rate, the YTM, the years to maturity and how many coupons the bond pays per year. The tool divides coupon and yield by the frequency, adds the present value of the coupon stream to that of the principal and returns the price, flagging premium or discount. The calculation assumes settlement on a coupon date, with no accrued interest.
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The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.