Current market price of zero coupon bond

The value of a zero coupon bond will change if the market discount rate changes.

Zero Coupon Bond Calculator

The longer the term the zero coupon bond is issued for the lower the bond price will be. Using the example above, if the issue was a 10 year zero coupon bond, then the price at issue would be given as follows:. In this example the bondholder has to wait 10 years before they receive the face value of the bond. He has worked as an accountant and consultant for more than 25 years in all types of industries.

He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own.

What is Zero Coupon Bond?

He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University. The time value of money formulas can be used to calculate a zero coupon bond price.


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  • Price of a zero coupon bond!
  • What is Zero Coupon Bond?.

Zero Coupon Bond Pricing Example Suppose for example, the business issued 3 year, zero coupon bonds with a face value of 1, The future bond cash flow is presented in the diagram below: To find the current price an investor would pay for the bond this cash flow needs to be discounted back to today, the start of period 1. Zero Coupon Bond Rates The value of a zero coupon bond will change if the market discount rate changes.

Bond Price and Term to Maturity The longer the term the zero coupon bond is issued for the lower the bond price will be. Last modified June 13th, by Michael Brown. The yield to maturity for zero-coupon bonds is sometimes referred to as the " spot rate.


  • What is a zero coupon bond?.
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How to Calculate a Zero Coupon Bond: 4 Steps (with Pictures)

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Zero Coupon Bond Calculator

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Calculating the Yield of a Zero Coupon Bond

Compare Investment Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Articles. Spot Rate: What's the Difference? Municipal Bonds How are municipal bonds taxed?

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