Price, Coupon and Yield: Why a Bond Can Cost More or Less Than 100
Three numbers on every bond, and the simple rule that links them.
Published 12 Oct 2026 · 2 min read
Every Treasury bond has three numbers that confuse many first-time investors: the coupon, the yield and the price. Once you see how they are linked, auction results become easy to read.
The three numbers
Coupon: the fixed interest rate printed on the bond, paid twice a year on its face value. It never changes.
Yield: the return the market asks for today. It changes from auction to auction.
Price: what you pay per 100 of face value. Price is what turns the fixed coupon into the market's yield.
The rule that links them
Yield below coupon → price above 100. Investors accept a lower return than the coupon, so they pay extra for the bond's higher coupons.
Yield equal to coupon → price about 100.
Yield above coupon → price below 100. Investors want more than the coupon pays, so they pay less than face value and gain the difference at maturity.
A real example
At the 30 September 2026 auction of the 12.25% 15-year bond No. 696, the weighted average yield was 10.79%, below the 12.25% coupon. The weighted average price was 110.51: above 100, exactly as the rule says (see the result).
What it means for your return
Buying above 100: your coupons are higher than the market rate, but you get back only 100 at maturity. Over the bond's life your overall return is close to the yield, not the coupon.
Buying below 100: your coupons are lower, but you gain the difference between your price and 100 at maturity.
If you hold to maturity, the yield at which you bought is a good guide to your return (before tax). If you sell earlier, the price then depends on market yields at that time.
Why prices move after you buy
If market yields rise after you buy, new bonds offer more, so your bond's market price falls; if yields fall, its price rises. Longer bonds move more. This only matters if you sell before maturity (see selling a bond before maturity).
Bond notices state the conventions used, such as the Actual/365 day count. Our calculator can show price from yield for paid plans.
This article is for education only and is not investment advice. Examples marked as illustrations are not current rates. Confirm terms in the official Bank of Tanzania notice and speak to a licensed adviser before you invest.