Bond pricing is determined by the present value of its future cash flows, which include periodic coupon payments and the bond's face value at maturity. The bond's price fluctuates based on interest rates: when market interest rates rise, bond prices fall, and vice versa. This is because the fixed interest payments from the bond become more or less attractive compared to new bonds issued at current rates. Factors like the bond’s coupon rate, time to maturity, and the issuer’s credit risk also impact its pricing.