Calculate bond prices using discounted cash flow analysis with customizable parameters
The principal amount to be repaid at maturity
Annual interest rate paid on face value
Time remaining until bond matures
Required rate of return for this bond
Number of coupon payments per year (1=annual, 2=semi-annual)
P = Σ[C / (1 + r/m)ᵗ] + F / (1 + r/m)ⁿᵐ
Where: P = Price, C = Coupon payment, r = YTM, m = Payments per year, F = Face value, t = Period, n = Years
Discounted Cash Flow
Future cash flows are worth less than current cash flows
Time Value of Money
Money available today is worth more than the same amount in the future
Risk-Return Relationship
Higher risk investments require higher expected returns