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Coupon Bond Valuation Formula

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Coupon Bond is a type of bond that includes attached coupons and pays periodic (typically annual or semi-annual) interest payments during its lifetime and its par value at maturity. Check FAQs

CB = C A \cdot (\frac{1 - {(1 + YTM)}^{- n PYr}}{YTM}) + (\frac{P vm}{{(1 + YTM)}^{n PYr}})

CB - Coupon Bond?C_A - Annual Coupon Rate?YTM - Yield to Maturity (YTM)?n_PYr - Number of Payments Per Year?P_vm - Par Value at Maturity?

Coupon Bond Valuation Example

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Here is how the Coupon Bond Valuation equation looks like with Values.

Here is how the Coupon Bond Valuation equation looks like with Units.

Here is how the Coupon Bond Valuation equation looks like.

976.7569 = 0.05 \cdot (\frac{1 - {(1 + 0.01)}^{- 12}}{0.01}) + (\frac{1100}{{(1 + 0.01)}^{12}})

976.7569 = 0.05 \cdot (\frac{1 - {(1 + 0.01)}^{- 12}}{0.01}) + (\frac{1100}{{(1 + 0.01)}^{12}})

976.7569 = 0.05 \cdot (\frac{1 - {(1 + 0.01)}^{- 12}}{0.01}) + (\frac{1100}{{(1 + 0.01)}^{12}})

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Coupon Bond Valuation Solution

Follow our step by step solution on how to calculate Coupon Bond Valuation?

FIRST Step Consider the formula

CB = C A \cdot (\frac{1 - {(1 + YTM)}^{- n PYr}}{YTM}) + (\frac{P vm}{{(1 + YTM)}^{n PYr}})

Next Step Substitute values of Variables

∴

CB = 0.05 \cdot (\frac{1 - {(1 + 0.01)}^{- 12}}{0.01}) + (\frac{1100}{{(1 + 0.01)}^{12}})

Next Step Prepare to Evaluate

∴

CB = 0.05 \cdot (\frac{1 - {(1 + 0.01)}^{- 12}}{0.01}) + (\frac{1100}{{(1 + 0.01)}^{12}})

Next Step Evaluate

∴

CB = 976.756901665343

LAST Step Rounding Answer

∴

CB = 976.7569

Coupon Bond Valuation Formula Elements

Variables

Coupon Bond

Coupon Bond is a type of bond that includes attached coupons and pays periodic (typically annual or semi-annual) interest payments during its lifetime and its par value at maturity.

Symbol: CB

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Coupon Bond

Annual Coupon Rate

Annual Coupon Rate is the nominal yield paid by a fixed-income security.

Symbol: C_A

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Annual Coupon Rate

Yield to Maturity (YTM)

Yield to Maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime.

Symbol: YTM

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Yield to Maturity (YTM)

Number of Payments Per Year

Number of Payments Per Year is the count on the payments made for the interest on bond in a particular year.

Symbol: n_PYr

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Number of Payments Per Year

Par Value at Maturity

Par Value at Maturity is the amount of money that the issuer promises to repay bondholders at the maturity date of the bond.

Symbol: P_vm

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Par Value at Maturity

Other formulas in Bond Yield category

Go Yield to Maturity

YTM = \frac{CP + (\frac{FV - Price}{Yrs})}{\frac{FV + Price}{2}}

Go Current Bond Yield

CBY = \frac{CP}{CBP}

Go Bank Discount Yield

BDY = (\frac{D}{FV}) \cdot (\frac{360}{DTM}) \cdot 100

Go Yield to Call for Callable Bond

YTC = (\frac{CP + \frac{C - CBP}{n y}}{\frac{C + CBP}{2}})

How to Evaluate Coupon Bond Valuation?

Coupon Bond Valuation evaluator uses Coupon Bond = Annual Coupon Rate*((1-(1+Yield to Maturity (YTM))^(-Number of Payments Per Year))/(Yield to Maturity (YTM)))+(Par Value at Maturity/(1+Yield to Maturity (YTM))^(Number of Payments Per Year)) to evaluate the Coupon Bond, The Coupon Bond Valuation formula is defined as a formula which determines the bond’s price by discounting the probable future cash flows to present value and then summing up all of them. Coupon Bond is denoted by CB symbol.

How to evaluate Coupon Bond Valuation using this online evaluator? To use this online evaluator for Coupon Bond Valuation, enter Annual Coupon Rate (C_A), Yield to Maturity (YTM) (YTM), Number of Payments Per Year (n_PYr) & Par Value at Maturity (P_vm) and hit the calculate button.

FAQs on Coupon Bond Valuation

What is the formula to find Coupon Bond Valuation?

The formula of Coupon Bond Valuation is expressed as Coupon Bond = Annual Coupon Rate*((1-(1+Yield to Maturity (YTM))^(-Number of Payments Per Year))/(Yield to Maturity (YTM)))+(Par Value at Maturity/(1+Yield to Maturity (YTM))^(Number of Payments Per Year)). Here is an example- 976.7569 = 0.05*((1-(1+0.01)^(-12))/(0.01))+(1100/(1+0.01)^(12)).

How to calculate Coupon Bond Valuation?

With Annual Coupon Rate (C_A), Yield to Maturity (YTM) (YTM), Number of Payments Per Year (n_PYr) & Par Value at Maturity (P_vm) we can find Coupon Bond Valuation using the formula - Coupon Bond = Annual Coupon Rate*((1-(1+Yield to Maturity (YTM))^(-Number of Payments Per Year))/(Yield to Maturity (YTM)))+(Par Value at Maturity/(1+Yield to Maturity (YTM))^(Number of Payments Per Year)).

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Coupon Bond Valuation Formula

Coupon Bond Valuation Example

Coupon Bond Valuation Solution

Coupon Bond Valuation Formula Elements

Other formulas in Bond Yield category

How to Evaluate Coupon Bond Valuation?

FAQs on Coupon Bond Valuation

Variable Name