1. What is Bond Value?

The bond value is the present value of all future cash flows expected from the bond (coupon payments and face value at maturity) discounted at the required rate of return (yield to maturity).

2. How Does the Calculator Work?

The calculator uses the bond valuation formula:

Where:

• \( C \) — Periodic coupon payment
• \( F \) — Face value of the bond
• \( r \) — Periodic yield to maturity
• \( n \) — Total number of periods

Explanation: The formula calculates the present value of all future cash flows, accounting for the time value of money.

3. Importance of Bond Valuation

Details: Bond valuation helps investors determine the fair price of a bond, compare different bonds, and make informed investment decisions.

4. Using the Calculator

Tips: Enter the bond's face value, coupon rate, yield to maturity, years to maturity, and payment frequency. All values must be valid (positive numbers).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between coupon rate and yield?
A: Coupon rate is the fixed interest rate the bond pays, while yield is the return investors demand given current market conditions.

Q2: Why does bond price change when yield changes?
A: Bond prices and yields have an inverse relationship. When yields rise, existing bonds with lower coupons become less attractive, so their prices fall.

Q3: What happens when bond price equals face value?
A: When the bond's price equals its face value, it's said to be trading at par, meaning its yield equals its coupon rate.

Q4: How does payment frequency affect bond value?
A: More frequent payments increase the bond's value slightly due to faster receipt of cash flows (time value of money).

Q5: Can this calculator be used for zero-coupon bonds?
A: Yes, for zero-coupon bonds, simply enter 0 for the coupon rate.