How to Use the Bond Price Drop Calculator
When interest rates rise, bond prices fall. This calculator uses discounted cash flow (DCF) to compute the exact price of your bond before and after a rate increase. Enter face value, coupon rate, maturity, current market yield, and the expected rate rise to see the exact dollar and percentage decline.
Longer maturities and lower coupons mean higher duration — and greater price sensitivity. A 1% rate rise on a 10-year bond causes roughly 8% price decline; on a 30-year bond, the decline can reach 15-20%. This is critical knowledge for managing bond portfolios in rising rate environments.
Frequently Asked Questions
Bonds pay fixed coupons. When market rates rise, new bonds offer higher interest, making existing bonds less attractive — so their price falls. Bond price and interest rates move in opposite directions.
Duration measures price sensitivity to rate changes. Longer maturity and lower coupon mean higher duration. A 1% rate rise causes approximately 1×duration percent price drop.
Yes. Longer maturity bonds drop more. A 1% rate rise on a 30-year bond can cause 15-20% price decline, while a 2-year bond drops only 1-2%.