Zero Coupon Bond Yield to Maturity Calculator
Calculating yield to maturity (YTM) for zero coupon bonds is crucial for investors to estimate the return on investment. Zero coupon bonds are sold at a discount and do not pay interest, making YTM calculation essential.
- Enter the face value, current price, and years to maturity.
- Click ‘Calculate’.
- View the results and chart below.
The formula for YTM of zero coupon bonds is: YTM = (Face Value / Current Price)^(1/n) – 1, where n is the number of years to maturity.
| Bond | Face Value | Current Price | Years to Maturity | YTM |
|---|---|---|---|---|
| Bond A | $1000 | $600 | 5 | 12.49% |
| Bond B | $1000 | $700 | 10 | 9.53% |
- Consider the risk associated with higher YTM.
- Use this calculator to compare bonds and make informed decisions.
What are zero coupon bonds?
Zero coupon bonds are bonds that do not pay interest. They are sold at a discount and redeemed at face value at maturity.
For more information, see the U.S. Department of the Treasury and Investopedia.