Bond Price / Yield Calculator

Bond price and yield have an inverse relationship. When market rates rise, existing bond prices fall. When rates fall, bond prices rise.

YTM is the total return anticipated if held to maturity, including all coupon payments and the gain/loss from buying at a discount or premium.

Duration measures bond price sensitivity to interest rate changes. A 5-year duration means ~5% price change for every 1% yield change.

Current yield is the annual coupon divided by the current market price. YTM includes both coupon income and the capital gain or loss from holding the bond to maturity, making it a more comprehensive return measure.

Duration assumes a linear price-yield relationship, but actual bond prices change convexly. Convexity measures this curvature, providing a more accurate price estimate for large yield changes. Positive convexity benefits bondholders when rates fall.

Current yield is the annual coupon divided by the current market price, ignoring capital gains or losses. YTM includes both coupon income and the gain or loss from holding to maturity, making it a more comprehensive measure. For a bond bought at a discount, YTM is higher than current yield, and vice versa for premium bonds.

Indian government bonds offer lower yields but are considered risk-free as they carry sovereign guarantee. Corporate bonds offer higher yields to compensate for credit risk. As of 2026, 10-year G-Sec yields approximately 6.8-7.2%, while AAA-rated corporate bonds yield 7.5-8.5% and lower-rated bonds yield significantly more.

The yield curve plots bond yields against their maturities. A normal upward-sloping curve indicates higher yields for longer maturities. An inverted curve (shorter maturities yielding more than longer ones) historically signals economic slowdown. Indian investors use the yield curve to assess market expectations for interest rates and growth.

When the RBI cuts interest rates, existing bond prices rise because their fixed coupons become more attractive compared to new lower-rate bonds. Conversely, rate hikes cause bond prices to fall. Bond investors in India closely monitor RBI MPC meetings as these decisions directly impact their portfolio values.

Modified duration measures a bond's price sensitivity to interest rate changes. A bond with modified duration of 5 years will see approximately 5% price change for every 1% change in yield. Indian bond fund managers use duration to manage portfolio risk, reducing duration when rates are expected to rise.