Market Price: Definition & Meaning | Bondfish
Market price is the price at which a bond currently trades in the market, determined by supply and demand and usually quoted as a percentage of its face value.
What it means
A bond is issued with a fixed face value (par value) — commonly 100 — but once it starts trading, its price moves continuously. A market price of 98.50 means the bond trades at 98.50% of face value (a discount); a price of 103.20 means it trades above face value (a premium).
The market price reflects everything investors currently know: the level of interest rates, the issuer’s credit quality, the bond’s remaining maturity, and how easily it can be bought or sold. When market yields rise, existing bond prices fall, and vice versa.
Note that the quoted market price is typically the clean price — it excludes accrued interest. The amount you actually pay (the dirty price) adds the interest accrued since the last coupon.
Why it matters for bond investors
The market price determines your true yield: the same bond bought at 95 delivers a higher yield to maturity than bought at 105. Comparing a bond’s market price to par also tells you at a glance whether the market demands more (discount) or less (premium) than the bond’s coupon currently offers.
Related terms
This definition is for general information only and is not investment advice. Bond investing involves risk, including possible loss of principal.