Profit on Bond


Lets say I am given a spot Curve and I buy a zero bond with 5 years maturity and sell it after 2 years. How do I calculate my profit?

To calculate the price I buy the bond for I do the following:

P5 = 1/(1+s5)5

How do I calculate the price I sell the bond for after 2 years? I believe simply calculating P3 = 1/(1+s3)3 is wrong? Should the price be based on forward rates? If so, which forward rates.

Thanks for the help!

It’s not.

So that is the correct way of doing it? No involvement of forward rates? Wonder how I got that idea.

It is.

As long as they give you s3, no.

Got me.

Hypnotherapy may help unearth the root cause.

Thank you. Appreciate the help, I will consider Hypnotherapy :slight_smile: