In Reading 36: The Arbitrage-Free Valuation Framework, they introduce the equation for finding the bond value at a node on a binomial interest rate tree.
The equation is: Bond Value = [(VH + C)/(1 + i) + (VL + C)/(1 + i)] x (1/2),
where VH = bond’s value if the higher forward rate is realized, VL = bond’s value if lower rate is realized, C = Coupon payment
Where I’m getting confused is in the BB & EOC problems for Reading 36 vs Reading 37, where they seemingly add another coupon payment to the equation above in reading 36, but not in reading 37 (for example, BB example 3 on p83, EOC problem 10 on p 102, contrasted against EOC problem 4 or 5 on p 173)
Hoping one of the smart people here can help clarify the problem
Bond Value at Node in Reading 36 = [(VH + C)/(1 + i) + (VL + C)/(1 + i)] x (1/2) + C (Why?)
Bond Value at Node in Reading 37:= [(VH + C)/(1 + i) + (VL + C)/(1 + i)] x (1/2)