ABSTRACT
The most basic of interest rate instruments are bonds and swaps, and in one form or another they underlie most activity in interest rate trading.
The notion of a zero coupon bond, an asset paying 1 at its maturity, was introduced in Section-1.1. The more usual coupon bond , which pays a series of usually semiannual coupons before returning the principal 1 at maturity, can of course be expressed as a linear combination of zero-coupon bonds, but they are not really within the scope of this book, and we do not consider them.
