Zero Coupon Bond Calculation Example

Introduction & Importance

Zero coupon bonds are a type of bond that does not pay interest, but is instead sold at a discount to its face value. The investor’s return comes from the difference between the purchase price and the face value at maturity. Understanding how to calculate the value of a zero coupon bond is crucial for investors and financial analysts.

For more information, refer to the U.S. Department of the Treasury and the Investopedia.