Calculate Zero Coupon Bond Price From Yield

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…

Zero Coupon Bond Calculation
Comparison of Zero Coupon Bonds
Bond Yield Term (years) Price
Bond A 5% 5 $823.55
Bond B 6% 10 $613.91
Zero Coupon Bond Comparison

Interactive FAQ

What is the formula used to calculate the price of a zero coupon bond?

Learn more about bonds from the U.S. Department of the Treasury

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