A bond pays periodic coupons plus the face value at maturity. The fair price today is the present value of those cash flows discounted at the prevailing market interest rate. This calculator computes price, current yield, and coupon stream details.
Payment frequency
Fair price
₹966
Discount
Current yield
7.76%
Annual coupon / price
Annual coupon
₹75
₹38 × 2
Price decomposition
This is the theoretical fair price using a constant discount rate. Real bond markets price in credit risk, liquidity premium and convexity. G-Secs trade close to fair value; corporate bonds typically at a credit spread above sovereign yields.
कुछ सामग्री अब भी अंग्रेज़ी में दिखती है।
Bonds are the second-largest asset class globally after equities, and access for Indian retail investors has expanded dramatically since RBI launched the Retail Direct platform in 2021. You can now buy Government Securities (G-Secs), State Development Loans (SDLs), Treasury Bills (T-Bills) and Sovereign Gold Bonds (SGBs) directly without intermediaries. Corporate bonds trade on NSE and BSE; tax-free PSU bonds (NHAI, REC, IRFC) offer 5.5-7% tax-free yields for high-tax-bracket investors. Understanding bond pricing is no longer just for institutional investors - it's a practical skill for any Indian with significant wealth to allocate.
The calculator computes the fair price of a bond given its coupon rate, time to maturity, face value, and the prevailing market interest rate. The fundamental insight: bond prices move inversely to interest rates. When rates rise, existing bonds with lower coupons become less attractive and trade at a discount. When rates fall, existing bonds with higher coupons trade at a premium. The magnitude of this price movement (duration) depends on the time to maturity - longer bonds are more sensitive.
Enter the face value (par value) of the bond - usually ₹1,000 in India.
Set the coupon rate - the fixed annual interest the bond pays as a % of face value.
Enter years to maturity.
Set the current market interest rate - your discount rate.
Choose coupon payment frequency - semi-annual is most common.
Read the fair price, periodic coupon, and current yield.
Each future coupon is discounted to today at the market rate. The face value at maturity is also discounted. The sum is the fair price. If the market rate equals the coupon rate, the price equals face value. If the market rate is higher than the coupon, the bond trades at a discount (below face). If lower, at a premium.
Price = Σ Coupon / (1 + r)^t + Face / (1 + r)^N
The bond pricing formula sums the discounted present values of every future cash flow. Each coupon (typically paid semi-annually for G-Secs and many corporate bonds) is discounted at the market rate for the number of periods until it's paid. The face value paid at maturity is also discounted. The total is the bond's fair price. If you pay less than this price, you'd earn more than the market rate; pay more and you'd earn less.
Current yield = annual coupon / market price. It's the immediate income yield but ignores the eventual capital gain or loss at maturity. Yield-to-maturity (YTM) is the discount rate that makes the bond's price equal to the present value of all cash flows - the true total return if held to maturity. YTM is the right comparison metric across bonds; current yield can mislead because it ignores price changes over time.
Indian bond conventions: face value is typically ₹1,000 for retail-accessible bonds (₹10,000 or ₹1 lakh for some institutional bonds). Coupon frequency is semi-annual for most G-Secs and many corporate bonds; annual for some PSU bonds. Day-count convention is actual/365 for most Indian bonds. Settlement is T+1 or T+2. These details matter for precise calculations but the calculator's standard discounting approach gives accurate prices for normal retail decisions.
Semi-annual coupon: ₹35.50. 10 coupon periods. Discounted PV of coupons + PV of ₹1,000 at 7% = roughly ₹1,004.20. Premium of ₹4.20 because the coupon (7.10%) slightly exceeds the market rate (7%). At market rate exactly 7.10%, the price would be ₹1,000 - par.
New price ≈ ₹964. Loss of about 3.6% if you sell. This illustrates duration risk - for a 5-year bond, a 100 bps rate hike causes roughly a 3-4% price drop. For 10-year bonds the drop would be 7-8%; for 30-year bonds, 15-20%. Long bonds carry more interest-rate risk.
When market rates rise, new bonds offer higher coupons. To compete, existing bonds must trade at a discount. When rates fall, existing bonds with higher coupons become attractive and trade at a premium.
Current yield = annual coupon ÷ market price. Simple but ignores capital gains/losses at maturity. YTM is the IRR of all cash flows including the face value at maturity - the true return if you hold to maturity.
Yes. Government securities (G-Secs) can be bought via the RBI Retail Direct platform. Corporate bonds trade on NSE / BSE. Tax-free PSU bonds and SGBs are also available to individuals.
Coupons are taxable as 'income from other sources' at slab rate. Capital gains on sale are taxed - STCG (held <12 months) at slab; LTCG (>36 months for unlisted, >12 months for listed) at 12.5% with indexation phased out.
Zero-coupon bonds don't pay periodic interest - they're sold at a discount and redeemed at face value. Useful for goal-based investing where you don't want reinvestment risk on coupons.
G-Secs are sovereign-backed and considered risk-free. Corporate bonds carry credit risk - check the credit rating. AAA bonds are safest, BBB and below speculative.
Indian financial products - home loans, fixed deposits, mutual funds, NPS, insurance - each carry their own quirks: monthly reducing balance vs flat-rate interest, quarterly vs monthly compounding, indexation on capital gains, the choice between the old and new tax regime. We design every finance calculator to use the formula that an Indian bank, AMC, or insurer would actually use, and to surface the assumptions in plain English so you can audit the result against your own statement.
Use this calculator alongside the EMI, SIP and inflation calculators to plan your money holistically. A standalone EMI number means little until you compare it with your in-hand salary, your existing debt-to-income ratio, and the impact of inflation on the real cost of the loan. The related-tool grid below makes it one click to chain these analyses together.
The Bond Calculator is part of the Finance suite on Online Calculator Tools, alongside 6 related calculators. All tools share the same UI patterns, the same privacy-first rendering (nothing is sent to a server), and the same commitment to showing the formula and assumptions behind every result.
