Last updated: November 3, 2026
Coupon Payment Calculator
finance calculatorFormula, worked examples and edge cases shown
A coupon is the interest a bond pays, and it is calculated on the face value — the amount the bond will repay at maturity, not the amount you paid for it. That one distinction is where almost every confusion about bond yields starts. This page gives you the payment, and the three numbers that all get called "the yield".
What this calculator does
Someone holding or considering a bond has a coupon rate in front of them and wants to know what it actually pays them, and why the yield being quoted elsewhere is a different number.
The coupon is calculated on the face value, not on what you paid
A $1,000 bond with a 5% coupon pays $50 a year, in two instalments of $25. That is true whether you bought it for $900, for $1,000 or for $1,100 — the coupon is a term of the bond, fixed when it was issued, and it does not know what you paid.
This is why a bond bought at a discount has a higher return than its coupon rate suggests, and a bond bought at a premium has a lower one. If you pay $900 for a bond that pays $50 a year and repays $1,000 at the end, you get the $50 plus $100 of capital gain. The coupon rate says 5%; the reality is better than that.
The current yield is the first attempt to capture this, and it is a crude one: $50 divided by the $900 you paid is 5.556%. That is better than the coupon rate, and it is still not the whole story, because it ignores the $100 you gain at maturity entirely.
Three numbers, and only one of them is the return
On a $1,000 ten-year bond with a 5% coupon bought at $900, the three numbers are: coupon rate 5%, current yield 5.556%, yield to maturity 6.367%. They are all correct and they answer different questions.
The coupon rate is a property of the bond — what it promises to pay each year as a share of face. The current yield is a property of the bond and the price — what the coupon is worth as a share of what you actually paid. The yield to maturity is the whole thing: the single rate at which every future payment, coupons and final face value together, discounts back to the price you paid.
The ordering is a reliable tell. Buy at a discount and the coupon rate is the smallest of the three, with yield to maturity largest. Buy at a premium — $1,100 for the same bond — and it inverts: coupon 5%, current yield 4.545%, yield to maturity 3.789%. The coupon rate never moves; the other two move in opposite directions around it.
What the calculator does not know about the bond
It assumes the bond is held to maturity and that every coupon is paid on time. A bond sold before maturity returns whatever the market price is that day, which may be more or less than the yield to maturity you were quoted — and it is the yield to maturity that gets quoted, which is why a bond fund can lose money in a year when every bond in it "yields" 5%.
It assumes no default. A corporate bond yielding 9% against a government bond yielding 4% is not a better bond; the extra five points are the market pricing the chance it does not pay. Nothing in this arithmetic knows anything about the issuer.
And it assumes the coupons are not reinvested. Yield to maturity is the return you get only if you can reinvest every coupon at that same rate for the rest of the bond's life — which is a strong assumption over ten years and is exactly the thing that makes a realised return differ from a quoted one. A bond is not a savings account.
How to use this calculator
- Enter the face value and the coupon rate printed on the bond. These two decide the payment, and nothing else does.
- Set the payment frequency to match the bond — twice a year for most US bonds.
- Put in what you paid for the bond. Leave it equal to the face value if you want to see a bond bought at par.
- Read the coupon per period first, then compare the current yield and the yield to maturity. The gap between them is the capital gain or loss to maturity, spread over the remaining life.
- Change the price and watch the coupon figure stay still while the two yields move. That is the distinction the page is about.
Worked examples
Example 1 — a $1,000 ten-year bond with a 5% coupon, bought at par
Bought at its face value of $1,000, this bond pays $25 twice a year — $50 a year, $500 in total coupons over ten years, plus the $1,000 back at maturity. Because the price equals the face value, the current yield is 5% and the yield to maturity is also exactly 5%. This is the case that checks the solver: with no discount and no premium, the only rate at which the payments discount back to the price is the rate they were calculated from.
Example 2 — the same bond bought at $900
The same $1,000 bond, the same $50 a year, bought for $900. The coupon is unchanged at $25 per period. The current yield rises to 5.556%, because the same $50 is now measured against a smaller price. And the yield to maturity rises further, to 6.367%, because it also counts the $100 gain between the $900 paid and the $1,000 repaid. Three numbers, one bond, and only the last one is the return.
Example 3 — the same bond bought at $1,100
Bought at a premium instead, the ordering inverts. The coupon is still $25 per period and $50 a year, but the current yield falls to 4.545% and the yield to maturity falls further, to 3.789%, because the $100 paid above face is a loss that has to be worked off over the ten years. The coupon rate stays at 5% in all three examples — it is the only one of the three numbers that is a property of the bond rather than of the trade.
Edge cases worth knowing
- A zero coupon rate
- The bond pays nothing until maturity, so every coupon figure is zero and the entire return is the difference between the price paid and the face value repaid. The yield to maturity is still well defined and is the only number on the page that means anything — this is exactly how a Treasury bill or a zero-coupon bond is quoted.
- A price of zero
- A bond that costs nothing has no finite yield, and the calculator reports that no yield was solved rather than returning a number. This is a degenerate input rather than a real trade, but a price field will accept it and a bisection that runs out of range returns its bound, which looks exactly like an answer.
- Annual instead of semiannual payments
- Setting the frequency to one gives a single $50 payment a year instead of two of $25. The annual total is identical and the yields shift slightly, because receiving the money later in the year is worth less. The frequency is a term of the bond, not a preference, so it has to match the actual instrument.
- A very long maturity
- A hundred-year bond has two hundred semiannual periods, and the face value repaid at the end contributes almost nothing to the present value at any realistic yield. The bond becomes a perpetuity for practical purposes and the yield to maturity converges on the current yield.
Frequently asked questions
What is the difference between coupon rate and yield?
The coupon rate is a percentage of the face value, fixed when the bond is issued, and it does not change when the price does. A yield is a percentage of the price you paid, so it moves every time the bond trades. On a $1,000 bond with a 5% coupon bought for $900, the coupon rate is 5% and the current yield is 5.556% — same $50, different denominator.
Why is yield to maturity different from current yield?
Because the current yield ignores the difference between what you paid and what you get back. Buying at $900 and receiving $1,000 at maturity is a $100 gain, and the yield to maturity spreads that gain across the remaining life of the bond. On the ten-year example that takes the return from 5.556% to 6.367%.
How much does a $1,000 bond with a 5% coupon pay?
Fifty dollars a year, usually in two instalments of $25. Over ten years the coupons total $500, and the $1,000 face value is repaid at the end, so the bond returns $1,500 in cash in total. That total is not the return — it ignores when each payment arrives, which is what the yield to maturity accounts for.
Can the yield to maturity be lower than the coupon rate?
Yes, whenever the bond is bought above its face value. A $1,000 bond bought for $1,100 has to lose $100 of value by maturity, and that loss comes out of the return: the coupon rate is 5%, the current yield is 4.545%, and the yield to maturity is 3.789%.
Is yield to maturity the return I will actually get?
Only if you hold the bond to maturity, it does not default, and you can reinvest every coupon at the same rate until the end. All three conditions matter and the third is the one usually missed — a realised return over ten years depends heavily on what rates do to the coupons you receive along the way.