Bond Calculator Price bonds, calculate yield to maturity, and model interest rate risk — with 2025 Treasury and corporate...
Bond Calculator
Price bonds, calculate yield to maturity, and model interest rate risk — with 2025 Treasury and corporate benchmarks.
Bond Price Formula** (semi-annual coupons):
$$P = \sum_{t=1}^{2n} \frac{C/2}{(1 + r/2)^t} + \frac{F}{(1 + r/2)^{2n}}$$
Where: • $C$ = annual coupon • $F$ = face/par value • $r$ = YTM • $n$ = years to maturity
Example**:
- $1,000 par, 5% coupon (semi-annual $25), 10 yrs, 4.2% YTM: Price = $25 × [1 − (1.021)−20] / 0.021 + $1,000 / (1.021)20 = **$1,065.26** → Premium Bond (coupon > YTM)
- Zero-coupon 10-yr @ 4.5% YTM: Price = $1,000 / (1.045)10 = **$643.93**
✅ Key Insight**: Bond prices and yields move **inversely** — when market rates ↑, existing bond prices ↓.
⚠️ Avoid these pitfalls:
- Callable bonds in falling-rate environments** — issuer redeems early → you reinvest at lower rates
- High-yield (junk) without diversification** — 1 default can wipe out years of coupon income
- Long duration in rising-rate regimes** — 20-yr bond @ 5% duration = 10% price drop for 2% rate hike
- Foreign bonds without currency hedge** — 5% yield + 8% FX loss = net −3%
✅ Pro Tips**:
- Use laddering** to smooth reinvestment risk
- Prefer TIPS** for inflation protection (1.8% real yield in 2025)
- Check call schedules** — avoid bonds callable within 3 years if rates may fall
| Type | Yield | 1% Rate ↑ → Price ↓ |
|---|---|---|
| 2-Yr Treasury | 4.30% | 1.9% |
| 10-Yr Treasury | 4.20% | 8.1% |
| A-Rated Corp | 5.40% | 7.3% |
| BBB-Rated Corp | 7.00% | 6.5% |
| 10-Yr TIPS | 1.80% real | 8.5% |
📉 Duration Formula**:
- Macaulay Duration** = Σ [t × CFₜ / (1+r)ᵗ] / Price
- Modified Duration** = Macaulay / (1 + r/freq)
- → Approx. % price change = −Modified Duration × ΔYield
➡️ Bond Price & Yield
“What’s a 5% coupon bond worth if market yield is 4.2%?” — see premium/discount status.
➡️ YTM Solver
Back-solve yield from market price — uses Newton-Raphson for accuracy.
➡️ Duration & Convexity
Measure interest rate risk — “How much will my bond drop if Fed hikes 25 bps?”
➡️ Bond Ladder
Model a 5-step ladder: $10K each in 2/4/6/8/10-yr bonds → steady maturity rollovers.
Note: Assumes no default, annual compounding unless specified. Zero-coupon = no coupons.