Calculate current yield, yield to maturity, total coupon income, and whether a bond is trading at a premium or discount. Includes an African Eurobond scenario you will not find on any other calculator.
Connecting Africa to Wall Street · Knowledge is Unction
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Bond Pricing: Premium, Par, or Discount?
Move the market price slider below to see where this bond sits relative to its face value.
Deep DiscountPar ($1,000)Premium
At ParYour YTM equals the coupon rate when you pay exactly face value.
Bond CalculatorAdjust sliders or load a preset — results update instantly
Face value (par)$1,000
The amount the bond repays at maturity. Most bonds have a face value of $1,000
Market price (what you pay)$980
Below face value = discount. Above face value = premium. Equal = at par
Annual coupon rate5.0%
The stated interest rate on the bond, applied to the face value to calculate each payment
Years to maturity10 years
How many years until the bond repays its face value
Coupon payment frequency
Yield to Maturity (YTM)
0%
Annualized total return if held to maturity
Current Yield
0%
Total Coupon Income
$0
Total Return
$0
Annual coupon payments
Final payment (coupon + face value)
Year
Coupon Income
Cumulative Coupons
Still to Recover
Running Total Received
How it works
Understanding yield to maturity and why it matters more than the coupon rate
The coupon rate tells you the interest payment based on the bond's face value. But when you buy a bond in the open market, you rarely pay exactly face value. If you buy a $1,000 bond for $950, you are getting those coupon payments on a $950 investment, and you will also receive the full $1,000 at maturity, earning an extra $50. Yield to maturity captures all of this, including coupon income, capital gain or loss, and time value of money, and expresses it as a single annualized return figure. It is the only number that lets you compare two bonds with different prices, coupons, and maturities on a fair basis.
Trading at a discount
When market price is below face value, your YTM will be higher than the coupon rate. You earn the coupon payments plus a capital gain at maturity. This happens when current interest rates are higher than the bond's coupon.
Trading at a premium
When market price is above face value, your YTM will be lower than the coupon rate. You earn the coupon payments but suffer a capital loss at maturity when you receive less than you paid. This happens when current rates are lower than the bond's coupon.
Bond types explained
US Treasury Bonds
Backed by the full faith of the US government. Among the safest fixed income instruments in the world. Yields are lower to reflect this safety and serve as the global benchmark for pricing all other bonds.
Corporate Bonds
Issued by companies to raise capital. Rated by agencies like Moody's and S&P. Higher coupon rates compensate for the risk that a company could default. Investment grade means lower risk, high yield means higher risk.
African Eurobonds
USD-denominated sovereign debt issued by African governments on international markets. Accessible through a standard US brokerage. Yields of 7 to 12% are common, compensating for sovereign and currency risk.
Context for diaspora investors
African Eurobonds and what they mean for you
Eurobonds are sovereign debt instruments issued by African governments in US dollars and sold on international capital markets. Countries including Nigeria, Kenya, Ghana, Zambia, and Ivory Coast have all issued Eurobonds to fund infrastructure and development projects. They trade on the same exchanges as US corporate bonds and can be purchased through a standard brokerage account.
The coupon rates are higher than US Treasuries because African sovereign bonds carry additional risk, including political risk, currency risk on the underlying economy, and debt sustainability concerns. For diaspora investors who understand the underlying economies and can manage that risk, Eurobonds represent a way to earn above-market fixed income while participating in the continent's growth story. Use the African Eurobond preset above to see how the numbers look compared to a US Treasury at current rates.
Common questions
What is yield to maturity and why does it matter more than the coupon rate?+
The coupon rate is the stated interest payment based on face value. YTM is the total annualized return you earn if you hold the bond until it matures, accounting for the coupon income plus any capital gain or loss from the difference between your purchase price and the face value. If you buy a $1,000 bond for $950, your current yield is higher than the coupon rate, and your YTM accounts for the additional $50 you will receive at maturity. YTM is the only number that lets you compare bonds with different prices, coupons, and terms on a level playing field.
What does it mean when a bond trades at a premium or discount?+
A bond trades at a discount when its market price is below face value. This happens when current interest rates are higher than the bond's coupon, making the bond less attractive than new issues, so it sells for less. A bond trades at a premium when its market price is above face value. This happens when current rates are lower than the bond's coupon, making it more attractive than new issues, so buyers pay more for it. The core principle is that bond prices and interest rates move in opposite directions. When rates rise, existing bond prices fall, and vice versa.
How does this calculator compute yield to maturity?+
YTM is solved using an iterative numerical method called Newton-Raphson bisection. The formula for a bond's price is the sum of all future coupon payments discounted to present value, plus the face value discounted to present value, using the YTM as the discount rate. Because this is a polynomial equation, there is no simple algebraic solution for YTM when the price is known. The calculator starts with an approximation, tests it, measures the error, and adjusts repeatedly until the rate produces a price matching your inputs within a fraction of a cent. This is how Bloomberg terminals and professional bond desks calculate YTM.
What is the difference between current yield and yield to maturity?+
Current yield divides the annual coupon payment by the current market price. If you pay $950 for a bond with a $50 annual coupon, your current yield is 5.26%. What current yield does not capture is the capital gain you will receive at maturity when the bond pays back $1,000. YTM includes both the coupon income and that capital component, spread evenly across the remaining years. YTM is always higher than current yield for a discount bond, and lower for a premium bond. Current yield is a quick snapshot; YTM is the complete picture.
Can I buy African Eurobonds as a US-based investor?+
Yes. African Eurobonds are dollar-denominated and trade on international markets accessible through a standard US brokerage. Some trade on the London Stock Exchange or Euronext, and others trade over the counter. Many retail investors access them indirectly through ETFs that hold emerging market or frontier market bonds. Direct individual purchases typically require larger minimums in practice. The key risk to understand is sovereign risk, meaning the issuing country's ability and willingness to repay. Always research the issuing country's credit rating, debt-to-GDP ratio, and fiscal trajectory before investing.
Are bonds a good investment for someone just starting out?+
Bonds serve a specific role providing stability, predictable income, and a counterbalance to the volatility of stocks. For most beginning investors with a long time horizon of 20 to 40 years, stocks will significantly outperform bonds over the full period. But bonds become increasingly important as you approach a financial goal, since capital preservation matters more than growth near the finish line. A common starting approach is to hold bonds through a diversified bond ETF rather than individual bonds, which gives you the stability benefit without requiring you to analyze individual issuers.
Why this matters
Bonds are fixed income. Stocks are wealth builders. You need to know both.
Understanding how bonds work is not optional for a well-rounded investor. Bonds are the asset class that governments, corporations, and sovereign nations use to fund everything from roads to technology infrastructure. Knowing how to read a bond's yield tells you what the market thinks about risk, inflation, and the future in ways that equity prices alone cannot.
For the African diaspora investor especially, the ability to evaluate a Nigerian or Kenyan Eurobond the same way you would evaluate a US Treasury is a superpower. Very few retail investors anywhere in the world have that skill. You now do.
Bonds are fixed income. The market is where you build wealth.
Learn how to balance bonds and equities in a portfolio built for the long term. Unction Trade walks you through it all from scratch.
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