Re: Coupons and Fixed Rate Legs, Take Two...

Posted by Toyin Akin on
URL: http://quantlib.414.s1.nabble.com/Coupons-and-Fixed-Rate-Legs-Take-Two-tp1186p1201.html


Hi again,

Another point that I would like to raise...

If you agree to the modifications in principal, then I believe that the
dirtyPriceFromYield() function within the bond.cpp class will benefit from
this because there are numerous calls to the InterestRate::discount()
function.

As this function takes reference dates as input parameters. We can now read
the reference dates directly from the coupon object rather than computing
them or setting them equal to the period start/end dates.

Of course, there is the question of reference dates concerning floating rate
legs too...

Toy out...

>From: "Toyin Akin" <[hidden email]>
>To: [hidden email], [hidden email], [hidden email]
>CC: [hidden email]
>Subject: RE: [Quantlib-users] Coupons and Fixed Rate Legs, Take Two...
>Date: Tue, 24 Jul 2007 11:46:29 +0100
>
>Hi,
>
>There is a small bug in the bond cashflow cpp file. You need to rename the
>class name from ctBondLeg to BondLeg in order to compile it.
>
>Toy out.
>
>>From: "Toyin Akin" <[hidden email]>
>>To: [hidden email], [hidden email]
>>CC: [hidden email]
>>Subject: [Quantlib-users] Coupons and Fixed Rate Legs, Take Two...
>>Date: Tue, 24 Jul 2007 11:36:38 +0100
>>
>>Hi Chiara,
>>
>>As you are the "THE EXPERT" regarding Bonds in my opinion...
>>
>>I've been playing around with some of the Bond classes (FixedCouponBond in
>>particular) trying to match the prices within FinCad.
>>
>>This really leads me onto the issue that I mentioned some months before
>>regarding the fact that the way reference dates are passed to coupon
>>objects for regular coupon periods were, I think, incorrect.
>>
>>The coupons simply take their reference Dates from the adjusted start/end
>>dates when in fact I beleive that refDates should be the unadjusted dates
>>for the period. The same unadjusted dates that the schedule class
>>internally builds just before adjusting them.
>>
>>In a nutshell, the refdates should be unaffected by holiday calendars.
>>
>>I'm not sure what your take on this is, but with my limited testing, I've
>>found that I can match the prices of bonds priced within FinCad when I use
>>unadjusted reference dates.
>>
>>I've included a modified schedule class (really exposing the unadjusted
>>dates array) and a new bondcashflowvectors class that uses the extra
>>information exposed from the schedule class.
>>
>>Can you take a look and tell me what you think?
>>
>>Is it also your understanding that the unadjusted reference dates should
>>be unadjusted dates for bonds? This I believe becomes very important once
>>you start playing with different daycounters.
>>
>>There is also the issue of bond specifications where you may have a
>>different pricing algo for the first coupon period if there is only one
>>coupon period left to maturity.
>>
>>Thus if I am pricing a 10 year bond and I require ISMA for the Yield
>>calculation type, but Simple if the calculation date is moved in such a
>>fashion that there is only one coupon period left to Bond maturity.
>>
>>Any thoughts on this...?
>>
>>Thanks in advance,
>>Toy out.
>>
>>_________________________________________________________________
>>Win tickets to the sold out Live Earth concert!  
>>http://liveearth.uk.msn.com
>
>
>><< bondcashflowvectors.cpp >>
>
>
>><< bondcashflowvectors.hpp >>
>
>
>><< schedule.cpp >>
>
>
>><< schedule.hpp >>
>
>
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