State why you would agree or disagree with the following statement: For a 1-basis point change in

Question:

State why you would agree or disagree with the following statement: For a 1-basis point change in yield, the price value of a basis point is equal to the dollar duration.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Bond Markets Analysis and Strategies

ISBN: 978-0133796773

9th edition

Authors: Frank J.Fabozzi

See More Books

Question Posted: Aug 22, 2015 07:26 AM

See More Questions

State why you would agree or disagree with the following statement: As the duration of a zero-coupon bond is equal to its maturity, the price responsiveness of a zero-coupon bond to yield changes is...
State why you would agree or disagree with the following statement: When interest rates are low, there will be little difference between the Macaulay duration and modified duration measures.
State why you would agree or disagree with the following statement: If two bonds have the same dollar duration, yield, and price, their dollar price sensitivity will be the same for a given change in...
Given that a quantity Q(t) is described by the exponential growth function Q(t) = 400e0.01t where t is measured in minutes, answer the following questions. (a) What is the growth constant k? k = (b)...
During the 2004 senatorial campaign in a large southwestern state, illegal immigration was a major issue. One of the candidates argued that illegal immigrants made use of educational and social...
Referring to Example 24.3, show that YX - XY = 1. Data from in 24.3 Example Let F be a field of characteristic zero, and let (F[x], +) be the additive group of the ring F[x] of polynomials with...
The design for a Website is to consist of four colors, three fonts, and three positions for an image. From the multiplication rule, $4 \times 3 \times 3=36$ different designs are possible.
Given that tG = -212.7 kJ mol-1 for the reaction in the Daniell cell at 25C, and b (CuS04) = 1.0 x 10-3 mol kg-i and b (ZnS04) = 3.0 x 10-3 mol kg-I, calculate (a) The ionic strengths of the...
Suppose the exchange rate between U.S. dollars and Swiss francs is CHF 0.92 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 0.84 euro. What is the cross rate of Swiss...
A store maintains data on customers, products and purchase records in three tables: CUSTOMER, PRODUCT, PURCHASE. The store manager wants to know which product is on its maximum discount for each...
Answer the below questions for bonds A and B. (a) Calculate the actual price of the bonds for a 100-basis-point increase in interest rates. (b) Using duration, estimate the price of the bonds for a...
The November 26, 1990, issue of BondWeek includes an article, Van Kampen Merritt Shortens. The article begins as follows: Peter Hegel, first V.P. at Van Kampen Merritt Investment Advisory, is...
Consider the effect of rational expectations on consumption behavior. a. Say that the government proposes a temporary tax cut of $20 billion, lasting for a year. Consumers witl1 adaptive expectations...
When 9 g of urea (CH4N2O) are added to 1 kg of acetone at 1 bar, the boiling point of acetone raises 0.24 K. The normal boiling point of acetone is 329.2 K. From this datum, estimate acetones...
Why do you think the problems with the infant industry argument are criticized by many economists? Explain why the example of Asian countries creates controversies in this matter.
Harlan Venture Inc. (HV) operates a restaurant named Harlans in Toronto. The shareholder, Stephen Painter, wants to know whether the system and controls in place at the restaurant are appropriate to...
Simon recently received a credit card with an 18% nominal interest rate. With the card, he purchased an Apple iPhone 11 for $700. The minimum payment on the card is $20 per month. a. If Simon makes...
Sisters Inc. beauty salon is a 100 percent subsidiary of Benefit Beauty Supply Inc., a beauty supply company. As a result of this relationship, there were several transactions between the two...
Under pseudo-first order conditions, the variation of k obs with [py] for reaction of square planar [Rh(cod)(PPh 3 ) 2 ] + (2 10 4 mol dm 3 ; cod= 24:22) with pyridine is as follows: Show that the...
The packaging division of a company having considered several alternative package designs for the company's new product has finally brought down their choices to two designs of which only one has to...
Answer the below questions. (a) What is an asset swap? (b)In pricing a single-name CDS, what information does the par asset swap market contain?
The following is an excerpt from MCDX Municipal CDS index on the rise, Credit Default Swap Market Reporting, July 1, 2010 (blog.creditlime.com/2010/07/01/municipal-cds-index-rising/) The 5-year MCDX...
Answer the below questions. (a) Explain how a single-name CDS can be used by a portfolio manager who wants to short a reference entity. (b) Explain how a single-name CDS can be used by a portfolio...
Assignment 1 1. Write a program to implement the following formula for a -10 and b = 4; result = (a + 2b - 4ab)^4 // ^4 means to the power of 4 (1 mark) 2. Write a program to implement result = sin...
I have most of it done, I just need help fixing some things. import java.util.Scanner; public class Main { private String[] database; private Scanner input; public Main() { database = new...
Part 2 - WeatherMonitor Suppose you observe daily temperatures and want to know how hot each day is compared to recent days. That is, you want to: keep track of daily temperature values and know for...

State why you would agree or disagree with the following statement: For a 1-basis point change in

Question:

Step by Step Answer:

The validity of the above statement is discussed below The price value of a basis point also r...View the full answer

Bond Markets Analysis and Strategies

Students also viewed these Corporate Finance questions