Bond Calculator · Practical guide
Zero Coupon Bond Price Calculator
No coupons, one payment at maturity — the price is simply face value discounted by the market rate.
At a glance
The Short Answer
A zero-coupon bond pays nothing until maturity, so its entire value is the discounted face value: Price = F ÷ (1 + r)^n. A $1,000 zero-coupon bond with 10 years to maturity at a 5% market rate is worth $613.91 today. Use the calculator above with the coupon rate set to 0 — it then discounts only the face value, exactly this formula.
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Enter your own values, then compare the result with the examples below.
Results
Zero-Coupon Prices at a Glance
| Market Rate | 10-Year Zero | 20-Year Zero |
|---|---|---|
| 4% | $675.56 | $456.39 |
| 5% | $613.91 | $376.89 |
| 6% | $558.39 | $311.80 |
*$1,000 face value, annual compounding. Doubling the years roughly squares the discount: at 6%, twenty years cuts the price to under a third of face value.
Why Zeros Are So Rate-Sensitive
With every dollar arriving in one distant payment, there is no coupon income to cushion price moves. The 20-year zero above loses about $145 — roughly a third of its value — when rates move from 4% to 6%, while a coupon-paying bond of the same maturity falls far less. That sensitivity, called duration, is highest for zeros.
Where Zero-Coupon Bonds Show Up
U.S. Treasury STRIPS are the classic example, created by separating the coupons from Treasury notes and bonds. Zeros suit investors targeting a known future expense — college tuition, a balloon payment — because the payoff at maturity is fixed and there is no reinvestment risk along the way.
The Tax Catch
The IRS taxes the implied annual growth of a zero-coupon bond — called imputed interest or original issue discount accretion — even though you receive no cash until maturity. Many investors therefore hold zeros in IRAs and other tax-advantaged accounts.
Frequently Asked Questions
How do I price a zero-coupon bond with this calculator?
Enter the face value, set the coupon rate to 0, enter the market rate and years to maturity, and choose the payment frequency. The bond price result is the discounted present value of the face amount.
Do zero-coupon bonds pay any interest at all?
Not in cash. Your entire return is the difference between the discounted purchase price and the face value you receive at maturity.
Why would anyone buy a bond that pays nothing until maturity?
Because the payoff is locked in. Zeros eliminate reinvestment risk and deliver a known lump sum on a known date — ideal for matching a future liability like tuition.
Are zero-coupon bonds riskier than regular bonds?
They carry more interest-rate risk — prices swing harder because all the cash arrives at the end — but a Treasury zero held to maturity has the same default safety as any Treasury.