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Zero Coupon Bonds

86 ratings | 22951 views
This narrated PPT describes how a zero coupon bond works, along with an example of how to calculate the yield to maturity. We contrast the yield to maturity with the bond equivalent yield.
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Text Comments (6)
albert ouedraogo (3 months ago)
So what does mean the 2,8 %?
supercupcake (1 year ago)
Is the current market rate the same as the interest rate?
Julia Marshall (1 year ago)
is $9850 the purchase price or the present value? what is the difference between the two?
Elizabeth Schmitt (1 year ago)
It is both. In calculated the yield to maturity, you are calculating the interest rate where the price of the bond is equal to the present value of the cash flows. So knowing the cash flows promised, knowing the purchase price, this implies a yield if the bond is held until maturity.
Red Shift (2 years ago)
I was looking for something more along the lines of explaining the different types of zero coupon bonds (government, corporate, etc.) and then giving examples of each (typical percent paid over each period of time). It seems from this video that zero coupon bonds aren't worth getting (ever!) as long as inflation stays as high as it is (8.5% (source is John Williams (of Shadowstats) ) ) because you would still be losing purchasing power because the bond's yield is less than inflation.
Amir K (4 years ago)
Thank you

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