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    Diana0918's Avatar
    Diana0918 Posts: 1, Reputation: 1
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    #1

    Nov 4, 2009, 06:19 PM
    Semi-annual payments and Zero-Coupon Bonds
    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's Avatar
    ArcSine Posts: 969, Reputation: 106
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    #2

    Nov 5, 2009, 04:47 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... :)
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