10-18-2010, 12:13 AM

I have seen the solution where the examiner of p4 calculates the interest yield of the FIXED rate bond to find out its fair value and than multiply it with the disc factor raised to the power of the number of years in maturity to find out the value of same bond if it was zero coupon bond. However when solving the question in class where mkt interest rate was not provided and the bond was floating rate we used the amount at which the bonds will be redeemed and than we discounted it with the discount factor raised to the power of the number of years in maturity. Can some one explain this??