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  • Zero Coupon Bond

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    Harshita Vora
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    Zero coupon bonds are bonds that are issued at a discounted price and redeemed at par value at maturity. For example, if an investor purchases a zero coupon bond for Rs. 920 that will pay Rs. 1000 at maturity after 1 year, the annual yield on the bond would be 8.70% based on the discounted purchase price and par value received.

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    Zero coupon bonds are bonds that are issued at a discounted price and redeemed at par value at maturity. For example, if an investor purchases a zero coupon bond for Rs. 920 that will pay Rs. 1000 at maturity after 1 year, the annual yield on the bond would be 8.70% based on the discounted purchase price and par value received.

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    111 views2 pages

    Zero Coupon Bond

    Uploaded by

    Harshita Vora
    Zero coupon bonds are bonds that are issued at a discounted price and redeemed at par value at maturity. For example, if an investor purchases a zero coupon bond for Rs. 920 that will pay Rs. 1000 at maturity after 1 year, the annual yield on the bond would be 8.70% based on the discounted purchase price and par value received.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    Zero Coupon Bonds

    Zero coupon bonds is a bond that is issued at a discounted price and redeemed at par at the time of maturity. Eg. Let us assume that Mr. A has invested Rs920/in a zero coupon. Let us further assume that after 1year he would receive Rs1000/ In the instant case Mr. A pays rs920/- (discounted price) and he would receive rs1000/- (par Value) after 1year. Return (yield) on the bond for Mr. A is 8.70% [(1000-920)/920]

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