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- Topic: Zero CopounBond
| Author | Topic: Zero CopounBond |
|---|---|
| jainish @2010-09-15 01:35:23 |
"the required yield of most zero-coupon bonds is based on a semi-annual coupon payment. This is because the interest on a zero-coupon bond is equal to the difference between the purchase price and maturity value, but we need a way to compare a zero-coupon bond to a coupon bond, so the 6% required yield must be adjusted to the equivalent of its semi-annual coupon rate. Therefore, the number of periods for zero-coupon bonds will be doubled, so the zero coupon bond maturing in five years would have ten periods (5 x 2)" Can someone please explain the concept again? |
