Enter any four of the five values below (leave one field empty) to calculate the remaining value of a fixed-rate coupon bond issued or traded on the coupon date.
Use this calculator to value a bond traded between coupon dates. It computes the dirty price, clean price, accrued interest, and the days since the last coupon payment, using common day-count conventions.
A bond is a fixed-income financial instrument that represents a loan made by an investor to a borrower — typically a corporation, government entity, or municipality. Bonds are used by organizations and governments to raise capital by borrowing from investors. In return, the issuer promises to pay back the principal (face value) on a specified maturity date, along with periodic interest payments (coupons).
Bonds are a core part of most investment portfolios. Compared to stocks, they are generally considered lower-risk, making them popular among investors seeking a stable income stream while preserving capital. However, the risk and return profile of a bond varies widely based on the creditworthiness of the issuer and the bond's duration. High-quality government bonds (such as U.S. Treasuries) are viewed as very safe, whereas high-yield corporate bonds (junk bonds) carry considerably higher risk and offer higher yields to compensate.
The structure of a bond refers to its key components and characteristics:
Beyond these core components, features such as the issuer's credit rating, call and put options, covenants, and marketability also play important roles in a bond's valuation.
Calculating the bond price involves discounting the future cash flows — interest payments and the principal repayment — back to their present value using the required yield (discount rate). The bond price is the sum of the present values of all these cash flows. The basic formula is:
where:
Suppose a bond has a face value of $1,000, a coupon rate of 5%, semi-annual payments, a maturity of 10 years, and the required yield is 6%.
Coupon payment per period (C) = 5% × $1,000 / 2 = $25
Number of periods (N) = 10 × 2 = 20
Discount rate per period (r) = 6% / 2 = 3% = 0.03
Discounting each semi-annual payment and the face value at maturity back to present value using a 3% per-period rate gives a bond price of $925.61. This process can be tedious by hand — our calculators above automate it entirely.
When calculating the price of a bond, it is often assumed that the bond trades or is issued on the coupon date. In reality, however, most bonds trade between coupon dates. In the bond market, the terms clean price and dirty price are used to distinguish between the two ways of quoting a bond's price outside the coupon date.
Accrued interest is the interest that has accumulated on a bond since the last coupon payment but has not yet been paid to the bondholder. The accrued interest formula is:
The clean price of a bond excludes any accrued interest since the last coupon payment. When bonds are quoted in financial markets and to the public, the clean price is typically used. It provides a standard way to compare the prices of different bonds without the variability introduced by differing interest accrual periods.
The dirty price, also known as the invoice price, includes accrued interest on top of the clean price. It is the actual amount the buyer pays the seller. Because bondholders earn interest daily, if a bond is bought or sold between coupon dates, the buyer compensates the seller for the interest earned from the last coupon date up to the settlement date. The relationship is:
Accrued interest depends heavily on how days are counted. Day-count conventions in the bond market are the rules that determine how days are counted for interest accrual. The main conventions are:
Different bonds may use different day-count conventions. The choice affects the calculation of accrued interest and, therefore, the price of a bond traded between coupon dates. The differences between conventions are normally very small — in extreme cases, up to about 6 days of accrued interest.
YTM is the total return an investor would receive if the bond is held until maturity, assuming all coupon payments are reinvested at the same rate. It is the internal rate of return (IRR) of the bond's cash flows.
When market interest rates rise, newly issued bonds offer higher coupons, making existing lower-coupon bonds less attractive — so their prices fall. Conversely, when rates fall, existing higher-coupon bonds become more valuable, and their prices rise.
The coupon rate is the fixed interest rate paid on the bond's face value. The yield is the return an investor actually earns, which depends on the price paid for the bond. If a bond is bought at a discount, the yield is higher than the coupon rate; if bought at a premium, the yield is lower.
Duration measures a bond's sensitivity to interest-rate changes. The higher the duration, the more the bond's price will move when interest rates change. Macaulay duration and modified duration are the two most common measures.
This Bond Calculator is provided for educational and informational purposes only. The results are estimates based on the inputs you provide and standard bond-pricing formulas. Actual bond prices and yields may differ due to market conditions, credit risk, liquidity, taxes, and other factors. This tool does not account for credit quality, supply and demand, embedded options, or other real-world market factors. Always consult a licensed financial advisor before making investment decisions.