Bond Calculator

Your inputs:

Bond price — while bonds are usually issued at par, they are available in the resale market at either a premium or a discount. If a bond is quoted at a discount of $86, enter $86 here. If you enter “0” for Bond Price and a value other than 0 for Yield-to-Maturity, the calculator will calculate the price.

The settlement date is the date the buyer and seller exchange cash and securities. Generally, the settlement date is one business day after the trade date for most bonds. When the settlement date does not fall on a coupon date (which is likely), the result is a stub period. This calculator supports accurate accrued interest calculations for stub periods.

The coupon rate is the rate of interest a bond pays each year. (Coupon interest is most frequently paid semiannually.) To determine the dollars of interest paid annually, multiply the par value by the coupon rate.

The call date (if a bond is callable) is essential information when evaluating a bond. The issuer may have the right to call the bond before maturity. The date this can happen is the “call date.” When the issuer calls the bond, the bondholder is paid the callable amount, and coupon interest payments stop. The former bondholder must then find another investment.

NOTE: Callable at this amount should not be confused with the price-to-call input. Price-to-call is the amount the purchaser will pay for the bond at a particular yield-to-call. This calculator lets you calculate either the price-to-call or the yield-to-call. If you want to guarantee a particular yield and the bond has a call provision, enter your desired yield in the yield-to-call input and enter “0” for the price-to-call.

Caution: Be careful when buying a bond with a call provision that is selling at a premium. If the issuer calls such a bond, you may experience a capital loss. The loss occurs when the issuer pays the call price, and you purchased the bond at a premium price.

The issue date is the date the bond starts trading in the resale market. You only need to provide the issue date if the settlement date is before the first coupon date. In such cases, check the checkbox and enter the date. The calculator will calculate the accrued interest from the issue date to the settlement date. If the first coupon date has passed, leave this option unchecked.

The maturity date is the date the issuer must repay the redemption (par) value. Any maturity date is legally permissible; however, bonds usually have a maturity between 10 and 40 years from the issue date.

Redemption value or par value is the stated face value of the bond; it is often $1,000. Par is the amount the issuer must repay on the maturity date. Bond traders usually quote prices per $100 of par value. If a bond’s par value is $1,000 and its current price is $860, the quoted price will be $86. This calculator follows this pricing convention by setting the default par value to $100.

Please note that you do not have to perform calculations per a single bond. If you want to purchase bonds worth $50,000 at par, enter 50 as the “Number of Bonds.” The resulting calculations will show the “Total Trade Amount” the purchaser must pay for 50 bonds with a total face value of $50,000.

Coupon frequency is how often the bondholder receives coupon interest payments. The most common payment frequency is semiannually (twice per year). Other frequencies, such as monthly or annually, are also used.

30/360 NASD (National Association of Securities Dealers): assumes a year consists of 12 periods of 30 days. Therefore, a year consists of 360 days. The difference between this method and the European method is how the calculations treat the last day of a month.

Actual/360 Days: the number of days between two dates is actual, and the number of days in a year is 360. When the terms require this method, a year may be longer than a calendar year. January 1, 2021, to January 1, 2022, consists of 365 days. Applying this convention, 365/360 equals approximately 1.013889.

Actual/365 Days: the number of days between two dates is actual, and the number of days in a year is 365. January 1, 2021, to January 1, 2022, consists of 365 days. Applying this convention, 365/365 equals 1.0.

Actual/Actual: the number of days between two dates is actual, and the number of days in a year is actual. July 1, 2023, to July 1, 2024 (spans a leap year) consists of 366 days. Applying this convention, 366/366 equals 1.0. January 1, 2024, to July 1, 2024 (semiannual calculation) consists of 182 days. 182/366 equals approximately 0.497268.

European Method/360 Days: assumes a year consists of 12 periods of 30 days. Therefore, a year consists of 360 days. The difference between this method and the NASD method is how the last day of a month is handled. If the second date is the last day of February or the 31st, the day is adjusted to the 30th.