Enter your bond’s face value, purchase price and maturity date to calculate the annualised yield instantly. Free, no signup required.
The amount the bond will pay at maturity — also called par value or redemption value. For most government and corporate zero-coupon bonds this is $1,000 (US) or £100 (UK gilts). Check your bond’s prospectus or broker confirmation if you are unsure. This is the fixed amount you will receive when the bond matures, regardless of what you paid for it.
The amount you paid — or are considering paying — for the bond today. Zero-coupon bonds are always priced below face value because they pay no interim interest. The deeper the discount, the higher the implied yield. Enter the actual transaction price, not the face value.
If you are comparing a bond not yet purchased, enter the current market price from your broker or bond screener.
The date the transaction settles — typically one to two business days after the trade date for government bonds. For bonds already held, use today’s date to calculate your current yield to maturity from this point forward.
The date on which the issuer repays the face value. This is fixed and stated in the bond’s terms. The gap between your settlement date and maturity date determines the holding period used in the yield calculation.
The calculator outputs your yield using the standard zero-coupon bond formula:
Yield = (Face Value / Purchase Price)^(1 / Years to Maturity) − 1
This is the annualised rate of return you will earn if you hold the bond to maturity. It is equivalent to the bond’s Yield to Maturity (YTM) — the single rate that equates the purchase price with the present value of the face value payment at maturity.
You purchase a zero-coupon bond with the following characteristics:
| Face value | $1,000 |
| Purchase price | $620 |
| Settlement date | 1 April 2026 |
| Maturity date | 1 April 2036 |
| Years to maturity | 10 |
Yield = ($1,000 / $620)^(1/10) − 1 Yield = (1.6129)^(0.10) − 1 Yield = 1.0489 − 1 Yield = 4.89%
This means if you hold the bond to maturity, you will earn an annualised return of 4.89% per year — entirely from the appreciation of the bond’s price from $620 to $1,000 over ten years. No coupon payments are received along the way.
To verify: $620 × (1.0489)^10 = $1,000 ✓
| Yield vs current market rates | What it suggests |
|---|---|
| Significantly above comparable government bond yield | Bond is priced at a discount to peers — higher credit risk or lower liquidity |
| Roughly in line with comparable maturities | Fair market pricing |
| Below comparable government bond yield | Bond is priced at a premium — unusually high demand or exceptional credit quality |
Always compare your calculated yield against government bonds of similar maturity (the risk-free benchmark) to assess whether the additional yield compensates adequately for the issuer’s credit risk.
For a zero-coupon bond with 10-year maturity, compare against the 10-year government bond yield in the same currency. If the zero coupon bond yields 5% and the 10-year government bond yields 4.3%, the 0.7% spread represents the compensation for credit and liquidity risk.
Run the calculator for each bond and record the results in a simple table:
| Bond | Face value | Price | Maturity | Yield |
|---|---|---|---|---|
| Bond A | $1,000 | $620 | 10 yr | 4.89% |
| Bond B | $1,000 | $550 | 10 yr | 6.17% |
| Bond C | $1,000 | $700 | 10 yr | 3.63% |
All three bonds mature in 10 years and pay $1,000 at maturity. The yield difference reflects differences in credit quality, liquidity, and market demand. Bond B offers the highest yield — but also carries the highest credit risk. Bond C offers the lowest yield — likely a higher-grade issuer with greater demand.
Yield alone does not determine the better investment. It must be assessed relative to the credit risk of each issuer.
Three: the bond’s face value (what it pays at maturity), the purchase price (what you pay today), and the number of years until maturity. The calculator derives the yield from these three figures using the standard zero-coupon yield formula.
Yes. Treasury STRIPS are zero-coupon securities created by separating the principal and coupon components of government bonds. They have a face value, a market price, and a maturity date — the same inputs this calculator uses. The yield calculation is identical.
Rearrange the formula: Price = Face Value / (1 + Target Yield)^Years. For example, to achieve 5% on a $1,000 bond maturing in 10 years: Price = $1,000 / (1.05)^10 = $613.91. You would need to buy the bond at or below $613.91 to achieve your 5% target yield.
No — the yield shown is a pre-tax figure. Zero-coupon bonds in many jurisdictions require you to pay tax on the imputed interest each year even though no cash is received. This can significantly reduce your effective after-tax yield. Consult a tax adviser for your specific situation. For a full explanation of how phantom income affects zero-coupon bond returns, see our guide below.
Zero-coupon bonds have no coupon rate — they pay no periodic interest. Any “coupon rate” listed is 0%. The yield comes entirely from the difference between what you pay and what you receive at maturity.
Both express an annualised return, but the mechanics differ. A coupon bond pays interim cash flows that need to be reinvested — meaning your actual return depends on the reinvestment rate. A zero-coupon bond pays nothing until maturity, so the calculated yield is locked in precisely, with no reinvestment assumption required. This makes zero-coupon bond yield more predictable but also means the bond is significantly more sensitive to interest rate changes.
This calculator handles the yield arithmetic. Understanding why zero-coupon bonds behave so differently from coupon bonds — particularly their extreme interest rate sensitivity, phantom income tax treatment, and use in immunisation strategies — requires going deeper.
👉 Zero-Coupon Bonds Explained — Duration, Tax Treatment & Portfolio Applications
Calculate YTM, current yield and yield to call for bonds that pay periodic interest
Measure interest rate sensitivity for any bond in your portfolio
Calculate the settlement price for coupon bonds traded between payment dates