Bond price calculator
A bond’s payments never change. What changes is what the market demands — and that alone moves the price. Move the rate slider and the whole thing stops being mysterious.
Your $1,000 bond is now worth
$1,000
The market wants exactly what this bond pays, so it trades at face value. Move the market rate and watch what happens.
Same coupon, same rate change, different maturities
The long bond moves far more for the same rate change, because more of its value sits in payments a long way off — and distant payments are the ones discounting hits hardest. That sensitivity is what “duration” measures.
This prices a simple bond held to maturity, annually compounded, with no credit risk, no tax, and no inflation. Real bonds settle between coupon dates, carry issuer risk, and bond funds never mature at all — they hold a rolling set of bonds, which is why a fund can stay down after a rate rise in a way a single held-to-maturity bond does not.
Why the price moves when the payments do not
A bond is a fixed set of future payments: a coupon each year, then the face value at maturity. Those payments are contractual. They do not change when interest rates move.
What changes is what a buyer will pay for them. If newly issued bonds pay 6% and yours pays 4%, nobody buys yours at full price — they pay less, until the discount makes the 4% stream competitive with 6%. The price falls because that is the only thing that can adjust.
Written out, the price is every payment discounted back to today:
price = Σ coupon/(1+r)^t + face/(1+r)^nThe coupon is fixed. Only r moves. That is the entire mechanism, and it is why bonds are described as having an inverse relationship with rates — it is arithmetic, not sentiment.
Why long bonds swing harder
Compare the 2-year and the 30-year in the tool. Same coupon, same rate change, wildly different price moves.
The reason: more of a long bond’s value sits in payments far in the future, and distant payments are hit hardest by discounting. A payment thirty years out is divided by (1+r) thirty times, so a change in r compounds through it. A two-year bond barely notices.
That sensitivity is what duration measures. It is why “bonds are safe” is too blunt to be useful — a short bond and a long bond are genuinely different instruments, and the long one can lose value in a way that surprises people who bought it for safety.
Bonds and bond funds are not the same thing
Hold a single bond to maturity and, absent default, you get every coupon and your face value back. The price falling in between is real but temporary; it resolves at maturity.
A bond fund never matures. It holds a rolling set of bonds, selling and buying as they age. There is no date on which you are made whole. This is why a fund can stay down after a rate rise in a way a held-to-maturity bond does not — and why people who thought they owned something safe are sometimes badly surprised.
Neither is wrong. They behave differently and are worth choosing between deliberately.
What this ignores
Credit risk — the possibility the issuer does not pay, which is the other half of what a bond’s yield is compensating you for. Also tax, inflation, settlement between coupon dates, and semi-annual coupons, which most real bonds pay.
The tool exists to make one mechanism visible, not to price a real holding. Check any actual bond or fund’s own documents for its terms.
Related: what a bond actually is
Educational only. This explains how these products and accounts work in general. It is not financial, tax, or legal advice, and not a recommendation to buy anything. Your situation is specific to you — check with a licensed professional before acting.