In this video, I explain what zero coupon bonds are and how their prices and yield to maturity can be calculated using Excel's =PV, =IRR and =RATE functions. After watching this video, you will understand why zero coupon bonds are also commonly referred to as "deep discount bonds".

Students will particularly find this video useful in understanding parts of Chapter 8 (Interest Rates and Bond Valuation) of Corporate Finance (13th Edition) by Ross, Westerfield, Jaffe and Jordan.