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The Difference in the Prices of a Zero-Coupon Bond and a Coupon

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The difference in the prices of a zero-coupon bond and a coupon bond with the same face value and maturity date is simply:


Definitions:

Quantity Sold

The total number of units of a product or service purchased by customers over a specified period.

Tax

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.

Consumer Surplus

The imbalance between the total budget consumers are willing to allocate for a product or service and the actual spending.

Consumer Surplus

The separation between the ideal amount consumers are willing to spend on a service or product and their real expenditures.

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