Bond Price and Bond Value difference, confusion, price, someone, between

manchester88

Hello all ,

Just a lil confusion between bond price and bond value .....Can someone pls explain the difference between both

Regards
Niki

joemoran

Same thing!

LokiDog2

The formula to calculate Bond price and bond value are different

Bond Value = Maturity value/
(1+i) years till maturity ^2

Bond price = cpn/(1+ytm/2)+cpn2/(1+ytm/2) and so on...

trogulj

The first formula you have given is the present value of the bond redemption exclusive of any coupon payments between T=0 and maturity date. It doesn't make sense to value a bond exclusive of any future coupon payments.

The price or value of any asset should theoretically be the present value of all of the assets future cash flows. Therefore coupons should be included in the calculation.

bapswarrior

Soddy: If I may correct you:

The first formula is basically to value a zero coupon bond assmuning semiannual compounding.

The second one is for valuing a coupon bearing bond assuming that the ytm is quoted in terms of bond equivalent yields. Of course, the final payment in the stream should be the face value.

Beatnik

Thanks Both ..