Calculate Zero Coupon Bond Price from Yield
Introduction & Importance
Zero coupon bonds are a type of bond that does not pay interest. Instead, they are sold at a discount to their face value and redeemed at maturity for the full face value. The price of a zero coupon bond can be calculated from its yield…
| Bond | Yield | Term (years) | Price |
|---|---|---|---|
| Bond A | 5% | 5 | $823.55 |
| Bond B | 6% | 10 | $613.91 |
Interactive FAQ
What is the formula used to calculate the price of a zero coupon bond?
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Learn more about bonds from the U.S. Department of the Treasury