Zero-Coupon Bond (ZCB) Pricing

The ZCB model uses a compound interest formula to determine the PT price:

$$P(t) = \frac{F}{(1+\text{initialAPY})^{t}}$$

where $\text{initialAPY}$ is the APY fixed at inception, $t$ represents years to maturity, and $F$ is the face value. This model captures the exponential accumulation of yield over time and is widely adopted in traditional finance. It offers a more precise representation of time value compared to linear discounting, making it particularly appropriate for longer-term PTs or contexts requiring alignment with standard bond valuation practices.