A bond is a loan you make to a company or government in exchange for interest payments.
What this calculator does
Bond prices rise when market interest rates fall, and vice versa.
When to use this calculator
Use this calculator before making any financial commitment that depends on this type of calculation. Running the numbers in advance lets you evaluate options without the pressure of a live negotiation or decision deadline.
Common mistakes
A frequent error is using annual rates where monthly rates are required (or vice versa). Simply dividing an annual rate by 12 is only an approximation — the correct conversion for compound calculations uses the (1 + r)^(1/12) − 1 formula.
Real-world scenarios
An employee receives a counter-offer from another employer: a £4,000 salary increase but no pension contribution versus the current role's lower salary with 8% employer pension. Running both through the finance calculator shows the true net financial value of each offer.
Frequently asked questions
What is YTM?
Yield to Maturity: the total return if you hold the bond until it matures.