Base Value


Key Base Value in
Inflation Bond refers to the base inflation index value I(t₀) that is used as the denominator in the ratio Q(t) = I(t-lag)/I(t₀) that represents the inflation growth applicable to any time t with an observation lag lag
Typically, the time t₀ is the time when the bond starts accruing.
The ratio Q(t) multiplies any given real amount resulting from a contractual bond coupon rate or principal redemption to form the nominal amount that is actually paid.
More details about the conversion of a real amount to the corresponding nominal inflation adjusted amount at
Inflation Adjusted Rate Swap