After dealing with money market interest rate calculations in Chapter 1, zero-coupon bond yields are a welcome relief and a return to classic time-value-of-money theory. A pricing formula for zeros is shown in equation 2.1,

where *PV* = present value, or price, of the bond, *FV* = future value, which usually is 100 (percent of par value) at maturity, *Years* = number of years to maturity, *PER* = periodicity—the number of periods in the year; and *APR _{PER}* = yield to maturity, stated as an annual percentage rate corresponding to

We can now use equation 2.1 to illustrate the yield calculations for the two TIGRS. ...

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