Bond pricing refers to the process of determining the fair value of a bond, which is a debt security issued by entities like governments or corporations. The price of a bond is influenced by factors such as interest rates, the bond's credit quality, and its time to maturity. When interest rates rise, existing bond prices typically fall, and vice versa. To calculate a bond's price, investors consider the present value of its future cash flows, which include periodic interest payments and the principal amount returned at maturity. This calculation helps investors assess whether a bond is a good investment compared to other options in the market.