Bond Valuation

What is Bond Valuation?

 

Bond valuation is a method used to determine the expected trading price of a bond. The expected trading price is calculated by adding the sum of the present values of all coupon payments to the present value of the par value.

 

How To Calculate The Value of a Bond

 

Since the value of a bond is equal to the sum of the present values of the par value and all of the coupon payments, we can use the Present Value of An Ordinary Annuity Formula to find the value of a bond.

 

Bond Value Calculator

 

Instructions:

  • Enter the par value, enter the coupon rate, and select the coupon rate compounding frequency.

  • Next enter the current market rate and the number of years to maturity, then click the "Calculate Bond Price" button.

Present Value of Ordinary Annuity Formula
Bond Price = C/k *
[ 1 - [ 1 ] ]
(1+i/k)nk
i/k
+
P
(1+i/k)nk
Variables
C = coupon payment (Par Value * Coupon Rate)
n = number of years
i = market rate, or required yield
k = number of coupon payments in 1 year
P = value at maturity, or par value

 

 

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