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Up0
Is the value of a bond in a node except for time0 is 0.5 * [(Vu + C)/(1+r) + (Vd + C)/(1+r)], for time0 is 0.5 * [(Vu)/(1+r) + (Vd)/(1+r)]
Half the time the curriculum says the Value is formula (except time0) plus the
current coupon, other times the coupon is left out.Can someone explain
the reasoning? -
Up3
if it is a coupon paying bond then you MUST include it. Not all bonds pay coupons. In short, if theres a coupon then include it, if not then don’t.
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