The prices in both cases must be equal and the yield must be 5% as current price is equal to face. Look at formulas and play a bit to understand... If you want to discuss the implications in practice drop me an email. However i warn you, bonds are complex instruments being derivatives rather than base and once you go into yield curves and actual day counting it becomes pragmatic problem.
Sent from my iPhone > On 22 Mar 2014, at 15:02, Christofer Bogaso <bogaso.christo...@gmail.com> > wrote: > > Hi again, > > It may be really simple, however I believe there may be some gap in my > understanding on how Bond works. > > Let say at time T, I buy a bond with face value $1mn for 2 years maturity > with coupon rate 5%, coupon will be paid semmi-annually. > > In this case, my question is: what is the value of bond at time T? > > Is it that, value of bond at time T is the face-value, since I paid $1mn > right this time? > > or, > > It is the discounted future cash flow? > > I understand that at time (T+dT), the value of this bond will be the > discounted values of the cfs. But I am confused on it's value at time T, > just when I bought that bond. > > Thanks for your explanation. > > [[alternative HTML version deleted]] > > _______________________________________________ > R-SIG-Finance@r-project.org mailing list > https://stat.ethz.ch/mailman/listinfo/r-sig-finance > -- Subscriber-posting only. If you want to post, subscribe first. > -- Also note that this is not the r-help list where general R questions > should go. _______________________________________________ R-SIG-Finance@r-project.org mailing list https://stat.ethz.ch/mailman/listinfo/r-sig-finance -- Subscriber-posting only. If you want to post, subscribe first. -- Also note that this is not the r-help list where general R questions should go.