Hey guys! I have an enquiry wrt deferred coupon payments! I have tried a question before and it stated that for the first 2 years, the bond will not be paying any coupons and thereafter, pay coupons until the end of maturity where t=6. So will the first 2 coupon payment be paid together with the principal payment or do we just ignore?

No you just ignore the first 2 years. But remember find the present value of coupon and princiapl for t=1 and discount it again once to get the PV. Basically this bond just pays 4 coupons and the principal.

A CFA Level 1 Discussion About Deferred Coupon Bonds (help Pls!!!)

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This topic has 2 replies, 2 voices, and was last updated Jan-1812:05 pm by Renawxh.

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- RoyD
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  24 Jan 2018 at 7:21 am
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  No you just ignore the first 2 years. But remember find the present value of coupon and princiapl for t=1 and discount it again once to get the PV. Basically this bond just pays 4 coupons and the principal.
- Renawxh
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  24 Jan 2018 at 12:05 pm
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  @RoyD‌ hey thanks! (:
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