No arb bond future price present, future, calling, contract, values

himanshumh

When calculating no arb prices for a treasury bond future why are future coupon values (FVC) subtracted from the spot price as opposed to present values, similiar to stock futures?

Example: Calc no arb futures price of a 1.2 year futures contract calling for the deilvery of a 7% bond, 10 years to maturity, price $1040 and risk free rate 5%.

FVC = ($35 x 1.05^.7) + ($35 x 1.05^.2) = $71.56

Futures price = ($1040 - $71.56) x 1.05^1.2

Thanks,

John