Finance & Irish taxes · Calculator companion · By K Imports
Fixed-coupon bond valuation: practical guide
This guide explains how to use the Count.ie fixed-coupon bond valuation. Value a plain fixed-coupon bond and measure interest-rate sensitivity. Follow the inputs, method and worked example below, then compare your own scenario.
Guide written .
Open the Fixed-coupon bond valuation calculatorWhat to prepare
- Have the figures for redemption / face value (€), annual coupon rate (%) and required nominal yield (%) ready, from a dated document, with the period (annual, monthly or per transaction) that each input expects.
- Note the date of the transaction, since this model has no year selector and fixed rates may have changed.
- Separate known facts from assumed rates before relying on the headline result.
Understand the inputs
The calculation method
Discount periodic coupons and redemption using the selected nominal yield; compute weighted maturity.
Worked example
Illustrative inputs and their result.
Example inputs
- Redemption / face value (€)
- 1000
- Annual coupon rate (%)
- 4
- Required nominal yield (%)
- 5
- Years to maturity
- 10
- Coupons per year
- 2
Calculated example result
- Bond Price
- €922.05
- Modified Duration Years
- 8.0542
How to interpret the result
On a coupon date; excludes accrued interest, default, calls, dealing costs and tax. Distinguish a tax saving, a tax bill, cash received and money remaining: they are not interchangeable. An estimate does not establish eligibility, filing compliance or when a refund will be paid.
Change one input of fixed-coupon bond valuation at a time and record the result; keep a record of the year, date and assumptions so a change in the result can be explained.
Common mistakes to avoid
- Do not mix tax years or apply a newly announced measure to an earlier transaction.
- Avoid counting an allowance, credit, contribution or loss twice.
- Check exclusions and personal circumstances before relying on the headline result.
Assumptions and sources
On a coupon date; excludes accrued interest, default, calls, dealing costs and tax.
If your case falls outside this scope, use a more suitable calculator or contact us about an unclear method.