Last updated October 13, 2026 · Report an error
A zero-coupon bond pays no periodic interest at all — instead, it's sold at a discount to its face value, with the entire return coming from the gap between the discounted purchase price and the full face value paid at maturity.
This calculator finds a zero-coupon bond's price and discount from face value.
How it works
Enter the face value, years to maturity, market yield, and compounding frequency. The calculator discounts the face value back to the present using the standard present-value formula, which becomes the bond's price.
- Enter face value.
- Enter years to maturity.
- Enter market yield (%).
- Enter compounding frequency.
- Click Calculate to see your results.
Examples
$1,000 face value, 5% yield, 10 years
A $1,000 zero-coupon bond maturing in 10 years at a 5% annual yield prices at about $613.91 today — a discount of about $386.09.
Who should use it
- Pricing a zero-coupon bond given its yield and time to maturity.
- Comparing a zero-coupon bond's discount against alternative investments.
Industry applications
- Fixed income investing
- Personal finance and goal-based savings planning
Advantages
- Uses the exact standard present-value formula for a single future cash flow.
- Supports both annual and semiannual compounding.
Limitations
- Doesn't account for tax treatment — zero-coupon bonds often have unique "imputed interest" tax rules that vary by jurisdiction.
Common mistakes to avoid
- Expecting periodic interest payments from a zero-coupon bond — by definition, it pays nothing until maturity.
- Confusing the bond's price (what you pay today) with its face value (what you receive at maturity) — the discount between them is the actual return.
Best practices
- Zero-coupon bonds are useful for matching a specific future need (like a child's future tuition payment) since their maturity value is fixed and known in advance — consider this use case when evaluating them.
Tips
- Zero-coupon bonds are more sensitive to interest rate changes than equivalent coupon-paying bonds with the same maturity — a factor worth considering if you might need to sell before maturity.
Frequently asked questions
Yes, with no signup and no limit on how many bonds you check.
That calculator prices a standard coupon-paying bond, which makes periodic interest payments in addition to returning face value at maturity; a zero-coupon bond makes NO periodic payments at all — its entire return comes from the discount to face value, requiring a simpler present-value-only formula.
Since a zero-coupon bond pays no interest along the way, the discount between its price and face value IS the investor's entire return — a bigger discount compensates for a longer wait or a higher required yield.
US Treasury STRIPS and zero-coupon municipal bonds are common real-world examples, often used for goal-based savings (like a known future expense) since their maturity value is fixed and certain.