9 minute read · Ultimo Research Desk · Reviewed 5 Sept 2026
How Eurobond Prices, Coupons and Yields Work
Three numbers describe a bond and people mix them up constantly: the coupon is what the issuer promised to pay, the price is what the bond trades at, and the yield is what that price implies you would earn. This guide works all three on one hypothetical bond so the differences are visible in dollars. It is about cash bonds; the last section says why the sums do not carry straight over to a Eurobond CFD.
Price: a percentage, not a dollar amount
Bonds are quoted as a percentage of face value. "97.50" means 97.5% of face, not USD 97.50. FINRA's bond primer covers the convention.
On USD 10,000 of face value:
| Quote | Sum | Price |
|---|---|---|
| 95.00 | 10,000 × 95 / 100 | USD 9,500 |
| 100.00 (par) | 10,000 × 100 / 100 | USD 10,000 |
| 103.00 | 10,000 × 103 / 100 | USD 10,300 |
A bond above par is one whose coupon is higher than the market now demands; below par, lower. That is the whole reason prices move: rates change, the coupon does not.
Coupon versus current yield
Say the bond pays 6% a year — USD 600 on USD 10,000 face, usually as two payments of USD 300. That USD 600 is fixed for the life of the bond. What changes with the price is what USD 600 represents as a percentage of what you paid:
| You paid | Coupon | Current yield |
|---|---|---|
| USD 9,500 | USD 600 | 600 / 9,500 = 6.32% |
| USD 10,000 | USD 600 | 600 / 10,000 = 6.00% |
| USD 10,300 | USD 600 | 600 / 10,300 = 5.83% |
Current yield ignores the gain or loss you will make between your price and the face value repaid at maturity. For that you need yield to maturity, below.
Accrued interest: the part of the price that is not the price
Coupons are paid on fixed dates, but bonds trade every day. If you buy 90 days after the last coupon, the seller has "earned" 90 days of the next one and you pay them for it on top of the quoted price. That quoted price is the clean price; clean plus accrued is the dirty price — what actually leaves your account.
On the 6% bond, using a 30/360 day count and 90 days accrued:
Accrued = 10,000 × 6% × 90/360 = USD 150
At a clean quote of 98.00: clean consideration USD 9,800, dirty consideration USD 9,950. Day-count conventions differ by market (30/360, actual/actual, actual/365), so the 90/360 here is the example's assumption, not a rule.
Yield to maturity: the number that includes the pull to par
Yield to maturity (YTM) is the single rate that makes the price equal to the present value of every remaining coupon plus the face value at maturity. For a one-year bond it is a one-line sum. Bought at USD 980 on a coupon date, paying one USD 50 coupon and USD 1,000 face value a year later:
980 = 1,050 / (1 + y) → y = 1,050 / 980 − 1 = 7.14%
So on this bond: coupon rate 5%, current yield 50 / 980 = 5.10%, yield to maturity 7.14%. The gap is the USD 20 you gain by paying 980 for something that repays 1,000. For longer bonds the same idea needs a spreadsheet or a calculator, but the logic is identical. YTM assumes every payment arrives on time and that coupons are reinvested at the same rate; FINRA's yield and return note spells out the caveats.
Why this does not carry over to a Eurobond CFD
A CFD on this bond tracks the price — 97.50, 98.00, 103.00. It does not pay the USD 600 coupon unless its terms include a cash adjustment, it does not repay face value at maturity, and it is quoted with the broker's spread. So on a CFD:
- Current yield and YTM describe the bond, not your position.
- What you make or lose is the price change on your exposure, plus or minus whatever the CFD's adjustment and swap terms say.
- Accrued interest may be inside the price, handled as a separate adjustment, or absent — the Specification window and the terms say which.
The CFD versus cash bond comparison puts the two side by side. Do not run a bond through the forex pip calculator; the units are wrong.
Frequently asked questions
Is a higher coupon a better bond? Not by itself. A high coupon at a high price can yield less than a low coupon at a low price — compare yields, not coupons.
Does a price of 95 mean everyone has lost 5%? No. It means 95% of face value. Someone who bought at 90 is up.
Is accrued interest a fee? No. It is the seller's share of the next coupon, paid to them by you. It is not the broker's.
Can a bond with a positive yield lose money? Yes — sell it below what you paid and the coupons may not cover the difference; the example in the comparison guide shows exactly that.
Educational content, not investment advice. All figures are hypothetical and exclude costs and tax. Bond prices fall when yields rise; a quoted yield is not a guaranteed return.
Sources
Written by the Ultimo Research Desk and checked against our own contract specifications and client agreement before publication; reviewed again when those change. Educational only — nothing here is a recommendation to trade. Spotted an error? Tell us.
Ready to see how bonds trades at Ultimo?
Bonds trading
