Go beyond the coupon rate. Compare purchase price, maturity cash flows, yield to maturity, a coupon-tax estimate, duration, and interest-rate sensitivity.
Pre-tax yield to maturity
YTM is an internal rate of return assuming all promised cash flows are paid and the bond is not called or defaulted. Actual accrued interest, fees, tax, and reinvestment results can differ.
Hold-to-maturity cash flows
The tax estimate applies the entered rate only to coupons. Tax on discount, redemption gain, or trading gain can depend on instrument structure, acquisition route, and investor status.
| Payment | Years | Gross coupon | Coupon tax estimate | Principal | Estimated net cash |
|---|
Worked example: a 4% coupon bond bought at KRW 980,000
These are the calculator’s default inputs: face value KRW 1,000,000, purchase price KRW 980,000, a 4% annual coupon, three years to maturity, semiannual coupons, and 15.4% tax on coupons. The coupon rate is 4%, but the bond is bought KRW 20,000 below par and repays KRW 1,000,000 at maturity, so the pre-tax yield to maturity including that discount is 4.723%.
| Item | Result |
|---|---|
| Gross coupon per payment (6 payments) | 20,000 KRW, 120,000 KRW in total |
| Current yield | 4.082% |
| Pre-tax yield to maturity | 4.723% |
| Coupon-tax-adjusted YTM estimate | 4.099% |
| Gross / estimated net profit at maturity | 140,000 KRW / 121,520 KRW |
| Modified duration | 2.789 |
| Price if market yield rises 1pp | 953,120 KRW (-2.743%) |
| Price if market yield falls 1pp | 1,007,799 KRW (2.837%) |
The coupon tax (KRW 18,480) applies 15.4% to coupons only; tax on the KRW 20,000 discount is not calculated. This is a hypothetical bond, not a market quote.
How far the duration shortcut drifts from the ±1pp prices
A separate experiment ran this calculator’s engine on 88 cases: six 3% coupon bonds bought at par (1 to 30 years) and two zero-coupon bonds (10 and 30 years), each under 11 yield changes from -3 to +4 percentage points. For maturities of five years or less, “modified duration × yield change” stayed within 0.13 percentage points of full repricing for a ±1pp move. For the 30-year bond, a 1pp rise cut the repriced value by 17.38% while the shortcut predicted 19.69%, a 2.31-point gap; for a 1pp fall the shortcut understated the gain (19.69% against 22.48%). For long maturities or large moves, read the ±1pp repriced values above instead of the shortcut.
Full tables, the 88-row CSV, and verification code are in the Korean write-up: 채권 듀레이션 근사는 금리가 1%p 움직일 때 얼마나 틀릴까
Core bond terms
| Term | Meaning | Common trap |
|---|---|---|
| Face value | Principal the issuer promises to repay at maturity | It may differ from your purchase price. |
| Coupon rate | Annual interest rate applied to face value | It does not reflect the price you paid. |
| Current yield | Annual coupon divided by current price | It excludes redemption gain or loss and time value. |
| Yield to maturity | Rate equating purchase price with all promised cash flows | It omits default, calls, fees, tax, and actual reinvestment outcomes. |
| Duration | Weighted time to cash flows and a basis for rate sensitivity | Modified duration only approximates small price changes. |
| Credit rating | A rating agency’s opinion of repayment risk | It is not a guarantee and can be downgraded. |
How to read labels such as 0/01/27
Foreign-bond screens often abbreviate a security as issuer · coupon rate · maturity date. Vendors may use spaces, slashes, or hyphens, so a fragment such as 0/01/27 is not universal by itself.
| Example | Typical interpretation | What to verify |
|---|---|---|
B 0 01/27/27 | U.S. Treasury bill, 0% coupon, maturing January 27, 2027 | The zero means a zero coupon, not a 0% YTM. Buying below face value can still produce a positive yield. |
UST 4.125 09/30/27 | U.S. Treasury, 4.125% annual coupon, maturing September 30, 2027 | 4.125% is the coupon rate, not the purchase-price-adjusted YTM. |
0 01/27 or 0/01/27 | Some screens mean a 0% coupon with a January 2027 maturity | Other systems may be showing part of a date; open the full security details. |
국고03250-2706 | Korean Treasury Bond with a 3.250% coupon and June 2027 maturity | The official Korean pattern is Treasury + coupon rate + maturity year and month. |
01/27 can mean January 2027 or January 27.Format references: Korean government bond-name FAQ
Interest and repayment structures
How return is paid
- Fixed-rate coupon: pays a stated coupon on a schedule.
- Floating-rate: resets against a reference rate plus a spread.
- Discount or zero-coupon: issued below face value and repaid at face value.
- Accreting or compound: accumulates return instead of paying it periodically.
- Inflation-linked: adjusts principal or interest to an inflation index.
Embedded options
- Callable: issuer may redeem early, creating reinvestment risk.
- Putable: investor may demand early repayment under stated terms.
- Convertible: may convert into issuer shares.
- Exchangeable or warrant bond: combines debt with exchange or subscription rights.
- Perpetual or subordinated: very long maturity or lower repayment priority creates additional risk.
Major bond classifications
| Dimension | Examples | What to check |
|---|---|---|
| Issuer | Sovereign, municipal, agency, financial, corporate | Even government bonds fluctuate in price; corporate credit risk needs closer review. |
| Rate | Fixed, floating, inflation-linked | Rate and inflation changes affect each structure differently. |
| Credit and priority | Investment grade or high yield; senior or subordinated; secured or unsecured | Recovery can differ even for bonds from the same issuer. |
| Currency and region | Domestic-currency, foreign-currency, overseas government bonds | Include FX, local tax, treaty, transaction-cost, and country risks. |
| Investment vehicle | Individual bond, bond fund, bond ETF | A fund or ETF may not have a fixed maturity repayment like an individual bond. |
Benefits and risks
Potential benefits
- Contractual coupons and principal can make cash flows easier to model.
- Bonds can diversify a portfolio away from equity-only risk.
- Existing fixed-rate bonds may rise in price when market rates fall.
- Issuer, maturity, rating, and currency offer ways to select a risk level.
Tradeoffs and risks
- Interest-rate risk: fixed-rate bond prices generally fall as market rates rise.
- Credit risk: the issuer may miss interest or principal payments.
- Liquidity risk: you may not sell promptly at a fair price.
- Inflation and FX risk: purchasing power or home-currency return can fall.
- Call and reinvestment risk: cash may return early or be reinvested at a lower yield.
Pre-purchase checklist
- Check issuer, rating, seniority, collateral, and guarantees.
- Compare YTM and after-tax cash flow rather than coupon rate alone.
- Read call, conversion, and early-redemption terms in the offering document.
- Check market liquidity, bid-ask spread, and transaction fees.
- For foreign bonds, model FX, local withholding, treaty rules, and conversion costs separately.
Not every Brazilian bond is tax-free. Korean treaty treatment can depend on whether the issuer is Brazil’s central government, who holds the bond, and how the product is structured. A fund, wrap account, trading gain, FX result, or fee does not automatically receive a 0% result. Source: NTS Brazil government-bond interpretation (Korean).
Calculation scope and official references
This calculator models a fixed-rate bullet bond. It excludes accrued interest, day-count convention, fees, default, calls, puts, conversion, early sale, FX, and actual tax administration. The ±1 percentage-point values reprice the same cash flows at a changed yield; they are not market-price forecasts.
The term must produce a whole number of coupon payments. A term within 0.0005 years (about four hours) of a whole payment count is treated as that count, so enter one month as 0.0833 years with monthly coupons.
Fixed in this version: two issues found in a browser test on October 5, 2026. A one-month term (0.0833 years) was rejected as out of range, and a 0% coupon bond bought at par showed a yield of ‘-0.00%’.
Tax figures (the 15.4% example and the tax notes) are as of October 8, 2026, the date the official references below were checked. Rules can change after that date.
Official references: Investor.gov bond basics and risks · interest rates and bond prices · Korean NTS financial-income guide · Korean Income Tax Act Article 129