Zero Rate is the rate of interest earned on an investment that provides a payoff at time T. We need zero rates to calculate 1) bond price 2) Par Yield When you calculate the cash price of a bond, we discount each cash flow at the appropriate zero rate for the time.  When a bond has a coupon, you divide it by the amount of periods you have.

The par yield is the coupon rate that causes bond price to equal its face value. You would be asked to find the coupon rate with this formula: (c/m)e^-rt+...+ (100+c/m)e^-rt=100

Conversion Formulas   Rc= m ln (1+Rm/m): To calculate Rc when Rm is known Rm= m(e^(Rc/m)-1): to calculate Rm when Rc is known   Rc= Continuously compounding rate Rm= same rate with compounding m times per year