A zero bond is a kind of bond issues by an American government that pays no interest at all, simply the capital sum at the end.
a) If interest rates are 6% what is the value today of a "zero" bond paying $10,000, ten years from now?
b) If interest rates suddenly halve to 3% a year, what is the same bond worth?© BrainMass Inc. brainmass.com June 3, 2020, 8:00 pm ad1c9bdddf
Unless otherwise indicated, the required yield of most zero-coupon bonds is based on a semi-annual coupon payment. This is because the interest on a zero-coupon bond is equal to the difference between the purchase price and maturity value, but we need a way to compare a zero-coupon ...
Calculations showing today's value of a zero coupon bond at certain interest rates.