Topics › Zero-Coupon Bond – Price
Zero-Coupon Bond – Price
Calculates today's price of a zero-coupon bond so that it yields the desired return until maturity (redemption at 100).
Type values, assign them with the value keys and press "Solve". It is the same financial calculator as under "Calculator" in the menu above.
Examples for this calculator
Each example is a story with explanation and a "what you learn" takeaway.
Formula
Price = 100 / (1 + i)^n
How the formula works
Price = 100/(1+i)ⁿ is pure discounting of the redemption value. Since a zero-coupon bond pays no ongoing interest, the entire return lies in the discount of the purchase price below 100 – if the market rate rises, the price falls.
Discounting the redemption value with the market yield.
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