What is a 'Bullet Bond'
A bullet bond is a debt instrument whose entire principal value is paid all at once on the maturity date, as opposed to amortizing the bond over its lifetime. Bullet bonds cannot be redeemed early by an issuer, which means they are noncallable. Because of this, bullet bonds may pay a relatively low rate of interest due to the issuer's interest rate exposure.
BREAKING DOWN 'Bullet Bond'
Both corporations and governments issue bullet bonds in a variety of maturities, from short to longterm. A portfolio made up of bullet bonds is generally referred to as a bullet portfolio. A bullet bond is considered riskier than an amortizing bond because it gives the issuer a large repayment obligation on a single date rather than a series of smaller repayment obligations spread over several dates. As a result, issuers who are relatively new to the market or who have less than excellent credit ratings may attract more investors with an amortizing bond than with a bullet bond. Typically, bullet bonds are more expensive for an investor to purchase compared to an equivalent callable bond, since the investor is protected against a bond call during a period of falling interest rates.Bullet Bond Pricing Example
Pricing a bullet bond is very straightforward. First, the total payments for each period must be calculated and then discounted to a present value using the following formula:
Present Value (PV) = Pmt / (1 + (r / 2)) ^ (p)
Where:
Pmt = total payment for period
r = bond yield
p = payment period
For example, imagine a bond with a par value of $1,000. Its yield is 5%, its coupon rate is 3%, and the bond pays the coupon twice per year over a period of five years. Given this information, there are nine periods where a $15 coupon payment is made, and one period (the last one) where a $15 coupon payment is made and the $1,000 principal is paid. Using the formula to discount these payments is:
Period 1: PV = $15 / (1 + (5% / 2)) ^ (1) = $14.63
Period 2: PV = $15 / (1 + (5% / 2)) ^ (2) = $14.28
Period 3: PV = $15 / (1 + (5% / 2)) ^ (3) = $13.93
Period 4: PV = $15 / (1 + (5% / 2)) ^ (4) = $13.59
Period 5: PV = $15 / (1 + (5% / 2)) ^ (5) = $13.26
Period 6: PV = $15 / (1 + (5% / 2)) ^ (6) = $12.93
Period 7: PV = $15 / (1 + (5% / 2)) ^ (7) = $12.62
Period 8: PV = $15 / (1 + (5% / 2)) ^ (8) = $12.31
Period 9: PV = $15 / (1 + (5% / 2)) ^ (9) = $12.01
Period 10: PV = $1,015 / (1 + (5% / 2)) ^ (10) = $792.92
Adding up these 10 present values equals $912.48, which is the price of the bond.

Bullet Repayment
A lump sum payment for the entire loan amount paid at maturity. ... 
Bullet Transaction
A loan in which all principal is repaid when the loan matures ... 
Discount Bond
A discount bond is a bond that is issued for less than its par ... 
Bond Yield
The amount of return an investor will realize on a bond. Several ... 
ZeroCoupon Bond
A zerocoupon bond is a debt security that doesn't pay interest ... 
Coupon Rate
The yield paid by a fixed income security. A fixed income security's ...

Financial Advisor
Using Excel PV Function to compute Bonds PV
To determine the value of a bond today  for a fixed principal (par value) to be repaid in the future at any predetermined time  we can use an Excel spreadsheet. 
Financial Advisor
7 Questions to Consider Before Investing in Bonds
There is a significant number of questions every investor, private or institutional, should consider before investing in bonds. 
Investing
Corporate Bonds: Advantages and Disadvantages
Corporate bonds can provide compelling returns, even in lowyield environments. But they are not without risk. 
Investing
Corporate Bond Basics: Learn to Invest
Understand the basics of corporate bonds to increase your chances of positive returns. 
Investing
The Basics Of Bonds
Bonds play an important part in your portfolio as you age; learning about them makes good financial sense. 
Investing
Risks To Consider Before Investing In Bonds
Make sure you understand the risks associated with bonds before making an investment decision.

How do I calculate yield to maturity in Excel?
Learn how to calculate a bond's yield to maturity in Microsoft Excel, which is one of the best methods of comparing bonds ... Read Answer >> 
What risk factors should investors consider before purchasing a callable bond?
Understand the difference between callable and noncallable bonds and consider all the various risk factors associated with ... Read Answer >> 
What determines the price of a bond in the open market?
Learn more about some of the factors that influence the valuation of bonds on the open market, and why bond prices and yields ... Read Answer >>