How to Calculate Value of a Treasury Bond at Face Value
The U.S. Treasury issues 30-year bonds as a type of debt to finance government operations. Investors purchase Treasury bonds because they consider them to represent a safe investment. They may buy bonds directly from the Treasury by paying the Treasury the face value of a bond (Treasury bonds are sold in multiples of $100) or on the secondary market. Bonds from the Treasury always have a face value of $100 and you will always pay the Treasury $100 for a T-bond, but the interest rates will vary. Bonds from the secondary market fluctuate in value depending on the current interest rate and the bond's rate.
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Instructions
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Look at your Treasury bond. The face value is the number printed in the corners, where a dollar amount would be if the bond was cash. This is the amount that the Treasury received for the bond (the original purchase price is called the principal) and will return after 30 years, once the bond reaches maturity.
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Check the interest rate of the bond (called a coupon rate). If the interest rate is 4 percent on a $100 bond, you receive a payment of $2 every six months (totaling $4 or 4 percent of $100 every year) for 30 years.
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Multiply the interest rate by 30 and add the principal. If you have a $100 bond with a 4 percent rate, the bond gives you $120 in interest over 30 years and you get the $100 principal back for a total value of $220.
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Tips & Warnings
Finding the value of a bond on the secondary market involves other considerations and is not an exact science. The value of a bond on the secondary market has little to do with face value and much more with other people's expectations about future interest rates, which are uncertain.
