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Compute a bond's fair price by discounting its coupons and face value at the yield-to-maturity.
Price = Σ(coupon/(1+y)^t) for t = 1…n + Face/(1+y)^n, where y = YTM per period and n = total periods. Semi-annual bonds divide coupon and YTM by 2 and double the period count.
Bond cash flows are fixed. If new bonds yield more, this bond's fixed coupons look worse — so its price drops until its yield matches the market.
Coupon > YTM → trades above face (premium). Coupon < YTM → below face (discount). Coupon = YTM → at par.
Coupon yield = coupon/face. Current yield = coupon/price. YTM = the discount rate that makes all cash flows equal the price — the true annualized return if held to maturity.
Yes — nearly all US Treasury notes and corporate bonds pay coupons twice a year.
No — US Treasury coupons are federal-taxable but state-tax-free; municipal bonds are typically federal-tax-free. Adjust the YTM you use accordingly.
Results are estimates for educational purposes only and are not financial advice. Verify with a qualified professional before making decisions.
Last updated October 2026