Calculating the Yield of a Zero Coupon Bond

This video demonstrates how to calculate the yield-to-maturity of a zero-coupon bond. It also provides a formula that can be used to calculate the YTM of any zero-coupon bond.
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[@TaxTimeForever]

I always find myself coming back to Edspira. Thank you so much; you are a true legend!

[@mechagotenks3169]

OH MY GOD THANK YOU! YOU LITERALLY JUST SAVED MY LIFE BECAUSE THE BOOK MADE IT SO COMPLICATED AND YOU EXPLAINED SO SIMPLE.THANK YOU!

[@Edspira]

No problem. Glad to help!

[@kevinyu8320]

Same here. Your video helped me refresh my memory since my corporate finance book explains it so much more complicated than my accounting textbooks :x Thank you!!!

[@changeme454]

The way of explaining is very convincible! The first starts with very elementary math and then the continuation is just epic.

[@red2838]

Great Video! The fact I actually asked myself what would happen if the zero bond would have a longer time to maturity…

[@ericorenato88]

I am having a problem when putting it into months. for example 16 months.

[@sohaabdullrahman6727]

what if the yield was on 3 mth, with 67 days to maturity, how we calculate that

[@gstlb]

I think the n in the final equation would be 4, that is, 1 / .25 but remember the YTM is for a year not 3 months

[@frankrizzo7781]

What would the equation be if face value is the unknown. I can't remember how to solve for ^1/n. YTM +1=(FV/DISCOUNT)^1/n In 1982 at of 10 I received 5k and talked my father into buying 10 year zero coupons that paid 12.99 %. I want to figure out thr discount on the 1000 dollar bonds.

[@showkatahmadlone7154]

Thankuuu sir For the concept clarification ❤❤❤

[@Luke-nh5tu]

Wouldn't it be the same if you take initial 5% rate divided that by the number of years ? Instead of making the whole new calculation.. just curious if it would be accurate

[@unityaboriginelove6595]

I was thinking the same thing. take the 5/3 = 1.6%

[@summitacharya3278]

What if Vd is not given How to calculate rate of return?

[@supercupcake119]

How would u calculate it If you were only given a par value, a current market rate, semi- annual compounding, and a 5 yr period?

[@Edspira]

I have a seperate video that explains this in more detail: kzbin.info/www/bejne/hWO6amZrnd-MprM. Your formula is: Zero Coupon Bond Value = F/(1+r)^t where r=market rate divided by 2 since it is paid semi-annually, and t=5x2 (10 payment periods since it is semi-annual). Also, a zero coupon bond is also known as a discount bond. I hope this helps. Good luck!

[@summitacharya3278]

Sir how to find maturity in redeemable bond

[@lurch4872]

What happens if interest rates become negative ?How do you calculate the value of the Bond then ?

[@arieskatkov467]

same thing

[@abdurehmankhan1333]

this is increadibe

[@ilad3689]

thank you so much

[@arieskatkov467]

you should have more subs

[@eddieteabagify]

worthless info unless you buy on the day of issuance. what happens when you buy on the secondary market 36 days after it was issued.

[@Edspira]

Eddie, I have an entire playlist called "chapter 14: long-term liabilities" (www.edspira.com/index-financial-accounting). It sounds like you were interested in the videos on amortizing a bond discount and premium. Best of luck in your studies!

[@ablelopez2904]

@@Edspira where did the 1 come from on the equation?