Zero Coupon Bond Valuation Tutorial
Zero Coupon Bond Formula
The generalised Zero Coupon Bond formula is:
- reflects the price of a zero coupon bond.
- represents the Par Value (aka Face Value) at time .
- And denotes the Yield to Maturity (aka bond yield).
Zero Coupon Bonds are also called “Deep Discount” bonds. That’s because these bonds trade at a discount (their Price is lower than the Par value).