In Chapter 5, we explained how to compute an arbitrage-free value for an option-free bond using spot rates. At Level I (Chapter 6), we showed the relationship between spot rates and forward rates, and then how forward rates can be used to derive the same arbitrage-free value as using spot rates. What we will review in this section is how to value an option-free bond using both spot rates and forward rates. We will use as our benchmark in the rest of this chapter, the securities of the issuer whose bond we want to value. Hence, we will start with the issuer’s on-the-run yield curve.