The Economics of Money, Banking and Financial Markets 4th Edition by Frederic Mishkin

Exercise 5

In this chapter, we discussed long-term bonds as if there were only one type, coupon bonds. In fact, investors can also purchase long-term discount bonds. A discount bond is sold at a low price, and the whole return comes in the form of a price appreciation. You can easily compute the current price of a discount bond by using the financial calculator at http://www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm.
To compute the values for savings bonds, read the instructions on the page and click on Get Started. Fill in the information (you do not need to fill in the Bond Serial Number field) and click on Calculate.