Work out bootstrapped zero rate instantly with clear inputs, formula shown and shareable results.
Bootstrapping builds a zero-coupon curve one maturity at a time. Discount the known earlier coupons at rates already solved, and whatever price remains must be explained by the final cash flow — which pins down the next zero rate.
Bootstrap step
P = C/(1+z₁) + (100+C)/(1+z₂)² → solve z₂
YTM assumes every cash flow is discounted at one rate. Zero rates discount each date properly and are what pricing models need.
Then the par yield and the coupon coincide, and the 2-year zero sits slightly above the coupon on an upward-sloping curve.