discount-factor

Hi all, Refer to the attached, I have a question to ask. Based on the previous slide which states PV = FV x Discount factor. If I apply it on the highlighted portion, PV will be $100.55, FV will be ($100 + $100 x (0.625/100)). May I know why is FV using $100 as the principal amount? Shouldnt...

Learning objectives: Define discount factor and use a discount function to compute present and future values. Define the “law of one price,” explain it using an arbitrage argument, and describe how it can be applied to bond pricing. Identify the components of a US Treasury coupon bond, and...