How do you know whether to add the coupon or not when valuing bonds using the nodes and decision trees?
If I’m recalling the material correctly: the coupon amount is always taken into account as a component of a bond’s pv at a particular node (at least in the case of the problems presented and discussed in the curriculum). There are instances where you might adjust the coupon amount at a particular node if the bond you’re valuing contains an embedded floor or ceiling.
"Between stimulus and response there is a space. In that space is our power to choose our response. In our response lies our growth and our freedom." -Viktor Frankl
You always add the coupon.
What might change is whether you’re interested in the value of the bond by itself or the value of the bond and the coupon together.
Do you have a specific example that’s vexing you?
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Simplify the complicated side; don't complify the simplicated side.
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