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!!!)

Add A Reply

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

Author

Posts
- Renawxh
  Participant
  - Undecided
  24 Jan 2018 at 6:13 am
  Up
  1
  ::
  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?
- RoyD
  Participant
  - Undecided
  24 Jan 2018 at 7:21 am
  Up
  3
  ::
  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
  Participant
  - Undecided
  24 Jan 2018 at 12:05 pm
  Up
  0
  ::
  @RoyD‌ hey thanks! (:
Author

Posts

Viewing 2 reply threads

You must be logged in to reply to this topic.