Selling a Bond Early: Coupon Income Plus a Price Swing
If you sell a bond before maturity instead of holding it to the end, your return isn't just the coupon interest you collected — it also includes any price change driven by shifts in market interest rates. When rates rise above your bond's coupon, its price falls; when rates fall below it, the price rises. This calculator takes your buy price, coupon rate, original maturity, and today's market rate to estimate your profit or loss from selling now.
The math runs in two steps. First, it adds up the coupon interest earned over your holding period. Then it plugs your remaining maturity and the gap between your coupon and the current market rate into a duration approximation (price change % ≈ -remaining years × rate gap) to estimate the price move. Adding both to your buy price gives the total profit/loss and estimated return.
This tool uses a simplified duration approximation instead of a full present-value bond pricing model, so treat it as a reference estimate. The real sale price also depends on credit quality, the bond's specific cash flow structure, and market supply and demand, so confirm the actual quote with your broker before trading.
Frequently Asked Questions
Newly issued bonds pay the higher current rate, so older bonds with a lower coupon become relatively less attractive and trade at a discount. When rates fall, the opposite happens and existing bonds become more valuable.
In this calculator's approximation, yes — if the two rates match, the price-change component is zero and your return is just the coupon interest earned during your holding period.
It works reasonably well for small rate moves, but the error grows with larger rate swings or longer remaining maturities. Treat it as a reference estimate and confirm the actual quoted price with your broker before trading.