If two portfolios have the same duration, the change in their value when interest rates change will

Question:

“If two portfolios have the same duration, the change in their value when interest rates change will be the same.” Explain why you agree or disagree with this statement.

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

Explain why you agree or disagree with affirmative action and how affirmative action may be affected by growing workforce diversity.
Explain why you agree or disagree with your results? Develop strategies to advance your career using your strength.
A company plans to launch a new product. Marketing for the new product will cost $8 million but the company expects revenues from other existing products to reach $280 million. The company has a...
A gaseous hydrocarbon (containing C and H atoms) in a container of volume 20.2 L at 350 K and 6.63 atm reacts with an excess of oxygen to form 205.1 g of CO2 and 168.0 g of H2 O. What is the...
In the following descriptions of a study, confounding is present. Describe the explanatory and confounding variable in the study and how the confounding may invalidate the conclusions of the study....
PepsiCo, Inc.s financial statements are presented in Appendix B. Financial statements of The Coca-Cola Company are presented in Appendix C. Instructions for accessing and using the complete annual...
Again consider the 400 parts in Table 2.2. From this table, \[ P(D \mid F)=\frac{P(D \cap F)}{P(F)}=\frac{10}{400} / \frac{40}{400}=\frac{10}{40} \] Note that in this example all four of the...
a.In the Maine Megabucks game, you win the jackpot by selecting five different whole numbers from 1 through 41 and getting the same five numbers (in any order) that are later drawn. What is the...
Jill is interested in a 6-year bond which pays a coupon of 10.0 percent annually and trades at a yield of 14.0% per annum. The face value is $1,000. What is the current price of this bond?
An ISP is granted the block 80.70.56.0/21. The ISP needs to allocate addresses for two organizations each with 500 addresses, two organizations each with 250 addresses, and three organizations each...
Consider the following portfolio: (a) What is the portfolios duration? (b) If interest rates for all maturities change by 50 basis points, what is the approximate percentage change in the value of...
For a corporate bond that has a low credit rating, why might an analytical duration be limited as a measure of interest-rate risk?
In Exercises 5053, rationalize the denominator. 14 V7- 5
Microsofts 2019 earnings per share were $5.06, and its growth rate during the prior 10 years was 12.06% per year. If that growth rate was maintained, how long would it take for Microsofts EPS to...
Explain why seven themes recur in international economics and discuss their significance.
What is entrepreneurship? How can one differentiate an entrepreneurial firm from any other type of firm? In what ways is an entrepreneur who just launched a restaurant different from someone who just...
Microsoft earned $1.42 per share in 2007. Ten years later in 2017 it earned $3.08. What was the growth rate in Microsofts earnings per share (EPS) over the 10-year period? If EPS in 2017 had been...
Which of the following are foreign direct investments? a. A Chinese company pays $6.49 million for a stake in the Hilton. b. A Russian businessman buys $44 billion on FOREX. c. An American company...
Stu and Harriett divorced on January 2, 2018 after eight years of marriage. Under the divorce decree, Harriett received a vacation home that was held jointly with Stu while they were married. The...
Maria Castigliani is head of the purchasing department of Ambrosiana Merceti, a medium-sized construction company. One morning she walked into the office and said, The main problem in this office is...
If the average quarterly return for a portfolio is 1.23%, what is the annualized return?
Suppose that bond ABC is the underlying asset for a futures contract with settlement six months from now. You know the following about bond ABC and the futures contract: (1) In the cash market ABC is...
A manager wishes to hedge a bond with a par value of $20 million by selling Treasury bond futures. Suppose that (1) the conversion factor for the cheapest-to-deliver issue is 0.91, (2) the price...
00 00 1) A state transition diagram for a synchronous finite state machine is shown in Figure 3. Derive the combinatorial logic required to implement this FSM with the use of Karnaugh maps. Note that...
Prove that Russian multiplication does what it needs to do, i.e. the result is the product of the two integers. Do not use the proof of the book. It is mainly an exercise in understanding the binary...
What is the fundament difference between growing a unicorn versus a camel? What are the financial recommendations for start-ups and the reasons given for those choices? Do you agree with these...

If two portfolios have the same duration, the change in their value when interest rates change will

Question:

Step by Step Answer:

While not the sole or best measure duration attempts to measure an assets price sensitivity to yield changes Duration does a good job of estimating an ...View the full answer

Bond Markets Analysis and Strategies

Students also viewed these Corporate Finance questions