Bonds

How Do You Calculate the Value of a Bond?

A bond is essentially an ‘IOU’ set up between an investor and a company or government entity. Under the agreement, an interest rate is set and the timing of payments that the lender will receive during the life of the bond is defined. At the end of the bond’s life- its maturity- the [...]

Calculate the Coupon Equivalent Rate

Coupon Equivalent Rate (CER) is a measure of yield that enables comparison of securities quoted on a discount basis to those quoted on the more typical return on principal invested. Measuring interest at the coupon equivalent rate is practical for Treasury Bills, commercial paper and other securities that are sold for less than face [...]

A Coupon Equivalent Yield (CEY) Calculator

The Coupon Equivalent Yield (CEY) is a calculation used to determine the yield on bonds that have maturities of less than one year. The CEY is used to measure the effective annual interest rate earned on a bond and the enables bond investors to compare the return on a 180-day Treasury bill to a [...]

A Basic Bond Valuation Calculator

A bond is essentially a loan made by the bondholder to a government, government agency, or a corporation. Under the agreement, the lender and borrower outline the periodic interest payments the lender will receive during the life of the bond and the timeframe to repayment of the original amount or “principal”. The duration [...]

The Taxable Equivalent Yield and Municipal Bonds
(includes calculator)

The Taxable Equivalent Yield is the return that an investor would require on a taxable investment in order to make it equal to the return on a tax-exempt investment. The taxable equivalent yield calculation is commonly applied when evaluating municipal bond investments as the primary appeal of municipal bonds is that the interest income is [...]

A Bond Equivalent Yield Calculator

The Bond Equivalent Yield (BEY) is a formula for describing the yield on a bond while taking into consideration multiple factors regarding the interest on the bond. The BEY enables the comparison of fixed-income securities whose payments are not annual against securities with annual yields. The bond equivalent yield is the yield that is [...]

Yield to Maturity of a Coupon Bond (includes calculator)

The yield to maturity (YTM) is the yield offered to a bondholder if the bond is held to maturity. As such, it is a measure of the return of the bond. YTM is expressed as an annual rate for which the calculation includes the current market price for the bond, its par value, coupon rate, [...]

Investing In Zero Coupon Bonds (includes calculator)

Zero coupon bonds (also called zeros or discount bonds) are bonds investors purchase at a price lower than face value. The face value is paid to the investor at maturity. Zero coupon bonds do not make interest payments (coupons). Instead, investors earn the compounded which is paid at maturity along with the difference [...]