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When I was a university student, we used to calculate bond price the long way using coupon payment over 1+r and so on. But I'm now trying to do it the fast way using online calculators, such as the Investopedia bond price calculator. Use of this calculator is mandated by the assignment for the certification I'm doing so I can't just use a spreadsheet to do it (except to check the answers are approximately the same).

However, it asks for a redemption value (which is mandatory) and I don't have that value. The redemption value is the price that the company would be willing to buy back its bond for. The only information I have is:

  • Par value = $100
  • Coupon rate = 4.33% with semi-annual coupon payments
  • YTM = 3.91%
  • Issue date: 20 Apr 2005
  • Settlement date: 7 Aug 2005
  • Maturity date: 20 Oct 2011

Any thoughts on what I'm supposed to use for redemption value to calculate my bond price, please?

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Asking for a redemption value only makes sense if we know the date the redemption value would apply to. It also doesn't make sense to ask for the redemption value now because the calculator is supposed to be working out the current value of the bond. So it must be asking for the redemption value at some other time, and the most likely candidate is at maturity. Typically this is just the par value of the bond, and indeed when you enter some dummy values into the calculator, it confirms this:

(This is with a redemption value of $100.00, which is typically the same as par value.)

| improve this answer | |
  • Perfect - that's all the online Investopedia calculator needed (substituting $100 into the redemption value box). I agree it doesn't quite make sense, but the result it gives that way is $102.29 which is almost the same as the $102.39 I get working out the bond price bond in Excel. The 10c difference will just be due to counting differences between days, I think. – Only_me Dec 28 '19 at 7:26

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