Zero-Coupon Bond Price Calculator

Price = face value / (1 + yield to maturity) ^ years to maturity. A zero-coupon bond pays no periodic interest -- it is sold at a discount to face value and the return comes entirely from that discount closing as the bond approaches maturity. Defaults: $1,000 face value, 5% yield, 10 years gives a price of $613.91.

Because there is no coupon, the entire return has to come from buying below face value. The gap between the price you pay ($613.91 on the defaults) and the $1,000 you eventually receive is $386.09, which is your total return over 10 years.

Lower. Yield and price move in opposite directions for any fixed-income instrument. A higher discount rate shrinks the present value of that future $1,000, so the price you would pay today drops.

Compound interest projects a principal forward to a future value. This page runs the same math in reverse: given a future face value, a yield, and a term, it discounts back to find what the bond should cost today.