Zero Coupon Bond Value Calculator: Instantly Determine Bond Worth
A zero-coupon bond pays nothing until maturity, so you must discount its face value to know today’s price. In 2023, $332 billion of U.S. Treasury STRIPS—classic zero-coupon securities—were outstanding (U.S. Treasury, 2024). Use the simple formula Face Value ÷ (1 + Yield)^Years to get an instant estimate of what the bond is worth right now.
Zero Coupon Bond Value Calculator
Bond Value:
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How to use the tool
Face Value (USD): Type the redemption amount—e.g., 100 000 or 60 000.
Rate / Yield (%): Enter the annual yield—e.g., 4.20 or 3.75.
Time to Maturity (years): Add remaining years—e.g., 7 or 18.5.
Press Calculate: The tool returns the bond’s present value.
Typical maturities range from 1 to 30 years (SEC Investor Bulletin, 2023).
STRIPS outstanding: $332 billion in 2023 (U.S. Treasury, 2024).
Price sensitivity rises as time to maturity lengthens (CFA Institute, 2022).
Accrued discount is taxable annually in the U.S. (IRS Pub 550, 2023).
FAQs
What is a zero-coupon bond?
A zero-coupon bond is issued at a discount and pays its full face value at maturity, without interim interest (SEC, 2023).
Why is the bond sold below face value?
The discount compensates you for the time value of money; the implied yield equals prevailing rates (Fabozzi, 2021).
How does yield affect price?
A higher yield raises the denominator in the formula, pushing today’s price lower—“price moves inversely with yield” (CFA Institute, 2022).
Are zeros good for periodic income?
No. You receive one lump-sum payment, so zeros suit goals like tuition or retirement balloons rather than monthly cash flow (Morningstar, 2023).
Do I pay tax before the bond matures?
In the U.S., the annual growth in value is taxed as phantom income, even though you receive no cash until maturity (IRS Pub 550, 2023).
How accurate is the calculator?
It uses the standard present-value formula, accurate to the cent; discrepancies arise only if inputs differ from market convention (Hull, 2022).
When should I recalculate?
Re-run the tool whenever yields shift by 25 basis points or more, or when maturity shortens by a full year (Bloomberg Guide, 2024).
Can I change currency?
Yes. Enter face value and interpret the output in the same currency since the math itself is currency-agnostic (Brigham & Ehrhardt, 2022).
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