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Bond Calculator Tutorial - Pricing Bonds with Financial Calculators

Value bonds and calculate yields

2nd INV HYP COMPUTE ENTER SET BGN RAD
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xP/Y
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RAND
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Calculate bond prices, yields to maturity, duration, and convexity. Professional bond calculator for fixed income analysis and investment decisions.

How to Use the Bond Calculator

  1. Access Bond Worksheet: Press 2ND BOND to enter bond calculations
  2. Enter Settlement Date: Input purchase date as mm.ddyy (e.g., 6.1206 for June 12, 2006)
  3. Set Coupon Rate: Enter annual coupon rate as a percentage
  4. Enter Redemption Date: Input maturity or call date as mm.ddyy
  5. Set Day Count: Press 2ND SET to choose 30/360 or ACT/ACT
  6. Choose Calculation: Enter YLD to compute price, or PRI to compute yield
  7. Calculate: Press CPT to compute the unknown value
  8. View Accrued Interest: Scroll down to see AI (accrued interest)

Understanding Bond Valuation

The Bond worksheet calculates bond price, yield to maturity or call, and accrued interest using either 30/360 or actual/actual day count methods. Bond valuation involves calculating the present value of all future cash flows - both coupon payments and the face value repayment.

Key Bond Concepts

  • Clean Price: Bond price excluding accrued interest (what's quoted)
  • Dirty Price: Clean price plus accrued interest (what you pay)
  • Yield to Maturity (YTM): Total return if held to maturity
  • Premium/Discount: Price above/below par value based on yield vs coupon
  • Accrued Interest: Interest earned since last coupon payment

Day Count Conventions

The calculator supports two day count methods:

  • 30/360: Assumes 30-day months and 360-day years (corporate bonds)
  • ACT/ACT: Uses actual days in months and years (government bonds)

Price vs Yield Relationship

Bond prices and yields move inversely. When the yield exceeds the coupon rate, the bond trades at a discount. When the yield is below the coupon rate, the bond trades at a premium.

Formula & Variables

Price = Σ[C/(1+y/f)^t] + FV/(1+y/f)^n
Where: C = Coupon payment, y = Yield, f = Payment frequency, FV = Face value, n = Number of periods
  • SDT (Settlement Date): Purchase date in mm.ddyy format (e.g., 6.1206 for June 12, 2006)
  • CPN (Coupon Rate): Annual interest rate as a percentage (e.g., 7.00 for 7%)
  • RDT (Redemption Date): Maturity or call date in mm.ddyy format
  • RV (Redemption Value): Percentage of par value at redemption (default 100)
  • ACT/360: Day count convention (360 = 30/360, ACT = actual/actual)
  • 2/Y or 1/Y: Coupon payment frequency (2/Y = semi-annual, 1/Y = annual)
  • YLD (Yield): Yield to maturity or call (enter to compute price, or compute from price)
  • PRI (Price): Clean price per $100 par value (enter to compute yield, or compute from yield)
  • AI (Accrued Interest): Interest accumulated since last coupon (auto-computed)

Date Entry Format

  • June 12, 2006: Enter as 6.1206 (US) or 12.0606 (EUR)
  • December 31, 2007: Enter as 12.3107 (US) or 31.1207 (EUR)
  • Valid range: January 1, 1980 to December 31, 2079
  • Note: Years 00-79 represent 2000-2079, years 80-99 represent 1980-1999

Example Calculations

Bond Price and Yield Example

Scenario: 7% coupon corporate bond, semi-annual payments, maturing 12/31/2007, settling 6/12/2006, 8% yield to maturity

Step Input Display Description
1 2ND BOND SDT= 12-31-1990 Enter Bond worksheet
2 6.1206 ENTER SDT= 6-12-2006 Enter settlement date
3 ↓ 7 ENTER CPN= 7.00 Enter 7% coupon rate
4 ↓ 12.3107 ENTER RDT= 12-31-2007 Enter redemption date
5 ↓ RV= 100.00 Leave redemption value as is
6 ↓ 2ND SET 360 Select 30/360 day-count
7 ↓ 2/Y Leave as semi-annual
8 ↓ 8 ENTER YLD= 8.00 Enter 8% yield
9 ↓ CPT PRI= 98.56 Compute bond price
10 ↓ AI= 3.15 View accrued interest
Result: Bond price = $98.56 per $100 par value

Accrued interest = $3.15 per $100. The bond trades at a discount because its yield (8%) exceeds the coupon rate (7%). Total amount to pay = $98.56 + $3.15 = $101.71 per $100 par.

Frequently Asked Questions

Enter the settlement date (SDT), coupon rate (CPN), redemption date (RDT), and yield (YLD). The calculator computes the present value of all future cash flows to determine the clean price (PRI). The price excludes accrued interest, which is shown separately as AI.

Clean price (PRI) excludes accrued interest and is what's typically quoted. Dirty price includes accrued interest (AI) and is what you actually pay. In our calculator, add PRI + AI to get the total amount paid per $100 par value.

When the yield to maturity exceeds the coupon rate, the bond trades at a discount (below par). When the yield is below the coupon rate, it trades at a premium (above par). At par, yield equals the coupon rate.

Use mm.ddyy format for US settings (e.g., 6.1206 for June 12, 2006) or dd.mmyy for European. Years 00-79 represent 2000-2079, while 80-99 represent 1980-1999. The calculator accepts dates from 1/1/1980 to 12/31/2079.

Use 30/360 for corporate bonds and ACT/ACT for government bonds. The 30/360 convention assumes 30-day months and 360-day years for simpler calculations. ACT/ACT uses actual calendar days for more precision.

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Disclaimer

This Financial Calculator is an independent, third-party tool provided by ryanoconnellfinance.com. It is not affiliated with, endorsed by, or connected in any way to Texas Instruments Incorporated or any of its products. All trademarks, including "BA II Plus," are the property of their respective owners. This tool is provided for educational and informational purposes only and should not be used for official examinations where specific hardware calculators are required. The accuracy of calculations is not guaranteed; verify all results.

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