Calculate Interest Rate On Zero Coupon Bond

Introduction & Importance

Zero coupon bonds are a type of bond that does not pay interest, but instead is sold at a deep discount to its face value. The interest is earned through the appreciation of the bond’s value over time. Calculating the interest rate on these bonds is crucial for investors to understand the potential return on their investment.

For more information, see the Treasury Direct FAQs and the Investopedia guide to bonds.