Zip Boys has outstanding zero coupon bonds maturing in 2016. a. How would you compute the yield-to-maturity

Question:

Zip Boys has outstanding zero coupon bonds maturing in 2016.

a. How would you compute the yield-to-maturity on bonds like these?

b. How do bondholders get a return when they buy these bonds?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...