Bond Price

The Bond Price calculation lets you calculate the purchase price, the market price, the accrued interest and the market quote or the yield to maturity of a bond, using either the required yield or the market quote, respectively.

Input

• required yield or market quote
• settlement date
• redemption date
• annual, semiannual or quarterly coupon rate
• face value
• redemption value

Results

• market price on the settlement day

• market quote or yield to maturity

• accrued interest

• purchase price

Examples

•

A $10,000 bond with semiannual coupons at 9.5 % is redeemable at par on August 20, 2005.
The bond is sold on October 10, 2003, at a market quote of 96 7/8.

What did the buyer pay?

Converted to its decimal form, the quote is 96.875.

Input	Market quote:	96.875
	Settlement date [mm/dd/yyyy]:	10/10/2003
	Redemption date [mm/dd/yyyy]:	08/20/2005
	Semiannual coupon rate:	9,5
	Face value:	10,000
	Redemption value:	10,000

Result	Purchase price:	9,819.16

Answer: The buyer paid $9,819.16.

•

On July 20, 2003, a corporation issues a twenty year $1,000 bond, with semiannual coupons at 12 %.
The bond can be called at 105 after 15 years.

What is the purchase price an investor should pay to yield 10 % compounded semiannually?

Step 1: Calculate the purchase price for the full term as if the bond isn't callable.

Input	Required yield:	10 %
	Settlement date [mm/dd/yyyy]:	07/20/2003
	Redemption date [mm/dd/yyyy]:	07/20/2023
	Semiannual coupon rate:	12
	Face value:	1,000
	Redemption value:	1,000

Result	Purchase price:	1,171.59

Answer: $1,171.59.

Step 2: Calculate the purchase price for the reduced term.

Input	Required yield:	10 %
	Settlement date [mm/dd/yyyy]:	07/20/2003
	Redemption date [mm/dd/yyyy]:	07/20/2018
	Semiannual coupon rate:	12
	Face value:	1,000
	Redemption value:	1,050

Result	Purchase price:	1,165.29

Answer: $1,165.29.

Conclusion: The price an investor must pay to guarantee a yield of 10 %, regardless what happens, is $1,165.29.

Related topics

Zero-Coupon Bond Price