Going from price to yield needs an approximation — but going the other direction, from a target yield to the price it implies, has an exact answer.
How it works
Summing the present value of every coupon payment plus the present value of the face value, all discounted at the target yield to maturity, gives the bond’s price.
What this does not include
This does not include semi-annual compounding, which most U.S. bonds actually use — this calculator uses annual periods for simplicity; a semi-annual version would halve the coupon and rate per period and double the number of periods.
How to use this calculator
- Enter face value, coupon rate, target yield to maturity, and years to maturity.
A worked example
A $1,000 face-value bond with a 5% coupon rate, target yield 6%, 10 years to maturity: price = $926.40 — trading at a discount, since the coupon rate is below the target yield.
What the variables mean
| Variable | Meaning |
|---|---|
| Face value | The bond’s par value at maturity |
| Coupon rate | The bond’s stated annual interest rate |
| Target yield | The desired yield to maturity |
| Years | Years remaining until maturity |
Edge cases worth knowing
A bond priced below face value (a discount) means its coupon rate is lower than the target yield — investors need a lower purchase price to make up the yield difference, exactly the relationship shown in the worked example.
Zero years to maturity makes the price calculation meaningless — at maturity, the bond is simply worth face value, so the calculator declines to show a result for that input.
Frequently asked questions
Why does a higher target yield produce a lower price?
Discounting the same fixed coupon and face value payments at a higher rate reduces their present value — bond prices and yields always move in opposite directions.
When does the bond price equal face value exactly?
When the target yield equals the coupon rate exactly — the bond trades at “par” in that specific case.
How is this different from the site’s other bond-yield calculator?
That calculator starts from price and approximates the yield; this one starts from a target yield and computes the exact price that yield implies — the reverse direction, with an exact rather than approximate answer.
