I am confused about how Schweser deals with the value of a callable bond in two areas of the material.
On page 169 of FI they discuss using the “call rule”. Here when using the binomial model once the price at a given node is above the strike price of the call ( 100 in this example) you would assume the price at the node is now 100 and add the coupon, add the value and coupon from the upper node apply 50% probability and discount.
On page 72 of derivitives and portfolio they ignore this bond price rule and simply take the node value plus the coupon of both upper and lower nodes, apply the 50% probability and discount.
Any idea why they are doing it two differant ways?