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Diana0918
Nov 4, 2009, 05:19 PM
Hey! I was wondering if if someone could explain what a zero-coupon bond is? Also, how would I do the PV of mortgages and finding semi-annual payments? I just need a brief summary! Thank you SO much!
ArcSine
Nov 5, 2009, 03:47 AM
A zero-coupon is a debt instrument that makes no interest payments prior to maturity. In other words, it's a bond that makes only a single payment, which is the maturity amount.

For the PV of a mortgage, use the "present value of an annuity formula". Google that phrase just as I've written it.

Clarify just a bit what's meant by "finding semiannual payments". There's a number of things it could mean, and with my track record at guessing, we could be here a while...:)