http://news.dtcdeals.com/general/calculate-a-annual-coupon-paying-bond-into-a-zero-coupon-equivlent/ Discounts you don't find elsewhere Sat, 28 Jan 2012 03:41:52 +0000 hourly 1 http://news.dtcdeals.com/general/calculate-a-annual-coupon-paying-bond-into-a-zero-coupon-equivlent/comment-page-1/#comment-1650 Sachin Sun, 01 Nov 2009 21:33:39 +0000 http://news.dtcdeals.com/general/calculate-a-annual-coupon-paying-bond-into-a-zero-coupon-equivlent/#comment-1650 I you invest $1 today at end of 4 years you will have $1.351 interest 0.065 0.0725 0.08 0.095 amount 1 1.065 1.1422 1.23 1.351 Now the task is to get zero-coupon yield(y) which is represented by 1(1+y)(1+y)^2*(1+y)^3*(1+y)^4 you can solve this to get the yield y = 7.807 % I you invest $1 today at end of 4 years you will have $1.351
interest 0.065 0.0725 0.08 0.095
amount 1 1.065 1.1422 1.23 1.351
Now the task is to get zero-coupon yield(y) which is represented by
1(1+y)(1+y)^2*(1+y)^3*(1+y)^4
you can solve this to get the yield
y = 7.807 %

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