anonymous
  • anonymous
when valuing a callable bond, do i add the first year's payments to the value of the bond?
Finance
schrodinger
  • schrodinger
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anonymous
  • anonymous
what kind of model are you using?
anonymous
  • anonymous
\[P=\sum_{t=1}^{n*}C/(1+r)^{t}+M*/(1+r)^n\]
anonymous
  • anonymous
here n* is number of years untill the assumed call date and M* is call price. Hope this solves all your doubt. and yes first year`s payment (coupon) will be count.

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