  In this paper we present a rigorously motivated pricing equation for
derivatives, including general cash collateralization schemes, which is
consistent with quoted market bond prices. Traditionally, there have been
differences in how instruments with similar cash flow structures have been
priced if their definition falls under that of a financial derivative versus if
they correspond to bonds, leading to possibilities such as funding through
derivatives transactions. Furthermore, the problem has not been solved with the
recent introduction of Funding Valuation Adjustments in derivatives pricing,
and in some cases has even been made worse.
  In contrast, our proposed equation is not only consistent with fixed income
assets and liabilities, but is also symmetric, implying a well-defined exit
price, independent of the entity performing the valuation. Also, we provide
some practical proxies, such as first-order approximations or basing
calculations of CVA and DVA on bond curves, rather than Credit Default Swaps.
